On Sunday, the Zallaf Libya Oil and Gas Exploration and Production Company and the US’ Honeywell-UOP signed the first contracts for the construction of the South oil refinery.
The signing ceremony was held at Zallaf’s headquarters, in the presence of Chairman and members of the Management Committee, and the Regional Manager of Honeywell-UOP, Muhammad Al-Muheisen.
Zallaf said in a statement that the contract stipulates that “Honeywell – UOP will carry out the initial engineering works for the refining units, and grant technical licenses to the licensed units.”
The project consists of two phases: the first being the (FEED) phase, for which the Honeywell – UOP project was signed.
Moreover, the second phase will be negotiated in another contract, in order to carry out installation works, and final tests for the refinery. This will be supervised by Honeywell at a later date.
“This step comes as part of the new vision adopted by the National Oil Corporation (NOC), and the promises made by its Chairman to expedite the establishment of the South Refinery, and assist in the development of the southern region,” the statement concluded.
On Friday, the The Wall Street Journal (WSJ) published a report, stating that Halliburton and Honeywell International Inc. are hammering out $1.4 billion dollars worth of deals, to develop an oil field and refinery with the NOC of Libya.
Libya has the largest known oil reserves in Africa. Italy’s Eni is planning investments aimed at replacing nearly half of the gas it was importing from Russia, with gas from Algeria and Libya.
Chevron is also looking to seal an energy exploration deal in Algeria, WSJ reported last month that the US oil giant announced a sizeable natural-gas discovery in Egypt.
Geoff Porter, President of US-based North Africa Risk Consulting Inc.: “North Africa has been slow to develop its potential because of political risks, either related to insecurity or bureaucracy,” but with Europe needing to replace Russian energy, “this is their moment.”
Western oil executives say they see a more stable political climate in North Africa. Especially in countries such as Libya, where fighting between local militias has been subdued in the past two years, following nearly a decade of civil war.
“I think we can be a good replacement for Russian gas to Europe,” NOC Chairman, Farhat Bengdara. said.
The state-owned company is expected to soon sign a $1 billion dollar agreement with Halliburton that will allow the firm to rebuild the Al-Dhara oil field, according to Bengdara.
The report added that Bengdara said the oil field in central Libya was destroyed by Islamic State militants in 2015. It is now run by ConocoPhillips and TotalEnergies SE. It would be one of the biggest deals for the US oil-services giant clinched in the Middle East and North Africa in recent years.