Libya's plans to ramp up its oil output could have a “stabilising effect” on global crude markets, after the North African state nearly doubled its production over the last five months, an Arab multi-lateral bank said.
Libyan crude output reached 1.3 million barrels per day in October but is still below the pre-civil war production of 1.6 million bpd.
"Libyan oil can continue to provide this kind of stabilising effect for global balances," said Mustafa Ansari, senior energy economist at Arab Petroleum Investments Corporation in a note. "Its proximity to key markets and huge upstream potential mean a geologically prolific oil province awaits investors."
However, the promise of higher production from Libya, which is closer to European markets than other producers, needs to be “matched by political progress too,” he cautioned.
Libya, which has been marred by conflict among rivals factions over control of its easily extractible, sweet oil resources, requires $60 billion to overhaul its upstream and downstream infrastructure, according to Mustafa Sanalla, the chairman of Libya's National Oil Corporation. In an interview with The National earlier this month, Mr Sanalla said around $20bn was required upstream alone to raise production to two million bpd by 2022.
The NOC received oil receipts of $1.66bn for the month of September, with total revenues from across Libya nearly $17bn so for this year, the highest in recent years.
Libya has northern Africa's largest proven reserves of oil - at 48 billion barrels, which is 3 per cent of the world's total.
Oil revenue accounts for nearly 90 per cent of fiscal revenue, one of the highest among Middle East producers, according to the International Monetary Fund.
Libyan oil, following the ramp up of production, had made significant inroads into export markets in the east and west, Apicorp said in its report.
"Sailing times to European ports, which take the bulk of Libyan crude-oil exports, range from two (Sardinia) to 11 (Rotterdam) days, compared with close to a month for Asian destinations,” said the report.
However, Apicorp observed there was significant interest among East Asian buyers for Libyan crude, with more cargoes being loaded and headed that way.
"Chinese, Taiwanese and other Asian countries are now also significant importers of Libyan crude – another example of the increasing importance, particularly in recent months, of Libya’s oil to global markets,” the report said.