The eastern Libyan government has offered Russia's Tatneft the opportunity to build a refinery in Libya as part of efforts to attract investments to the region.
According to the Libyan Observer, the offer was made during the Russia-Islamic World Forum in the republic of Tatarstan, when the eastern government's investment minister suggested that Tatneft build a refinery in Benghazi or Tobruk.
Tatneft already has operations in Libya, where last year it struck oil at a field it operates together with the National Oil Corporation in the Ghadames Basin in northern Libya.
"Russia has a lot of crude oil, but its supplies are now difficult due to sanctions and embargoes," Libya's investment minister, Ali al-Saidi, told Russian news outlet Novosti. "This matter could be solved by a refinery being established in Libya, where crude oil will be transported, and oil derivatives will then be sold."
Al-Saidi also suggested that Tatarstan-based Tatneft could use Libyan oil to process in the future refinery, should it agree to build one. "Libya has incredible reserves," al-Saidi said.
Libya has the largest proven oil reserves in Africa, with oil accounting for almost 100% of government revenues. However, developing these reserves has been challenging, with political instability hijacking production potential as rival governments and militias compete for control of the country's oil wealth.
There is also a financial issue, with oil minister Mohamed Oun saying earlier this year that Libya needed $17 billion in investments over the next three to five years in order to boost production to 2 million barrels daily.
Right now, production of oil is less than 1.5 million barrels daily, although there are plans to boost this to 1.5 million bpd by the end of 2025. Libya is exempted from the OPEC+ cuts because of its troubles with production growth, with fields often the target of protests and blockades by various groups.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More