Policy and Targets
Background and the Role of Reductions in Meeting Environmental and Economic Objectives
Oil production in Libya has fluctuated wildly in recent years. Between 2012 and 2021, daily oil production averaged 0.8 million barrels, ranging from 0.4 million to 1.4 million barrels. The volume of gas flared correspondingly fluctuated, falling from 5.9 bcm in 2012 to 2.4 bcm in 2016, declining sharply to 2.5 bcm in 2020, and increasing again to 6 bcm in 2021. The flaring intensity during this period fluctuated, reaching its highest level in 2020, but then dropping again in 2021 on the back of an increase in oil production. Of the countries covered in this review, the flaring intensity in Libya in 2021 ranked fourth. There were 86 individual flare sites in the last flare count, conducted in 2019.
Gas flaring volume and intensity in Libya, 2012–21
With the establishment of the Technical Centre for Protection of the Environment in the early 1980s, Libya was among the first North African countries to establish a government agency tasked with protecting the environment. The agency was later renamed the Environment General Authority and given additional responsibilities and powers. Until recently, it acted as an independent and autonomous institution; after recent changes in the government, it now reports directly to the Ministry of the Environment.
Libya ratified both the Paris Agreement and the Kyoto Protocol but has not yet submitted an NDC to the UNFCCC. It is undergoing substantial political changes following the formation of a new government. These changes may have a significant impact on the oil and gas sectors and environmental management. Therefore, the government’s approach to gas flaring and venting, including the regulation and regulatory practices currently in place, is subject to change.
Targets and Limits
No evidence regarding targets and limits could be found in the sources consulted.
Legal, Regulatory Framework, and Contractual rights
Primary and Secondary Legislation and Regulation
Following multiple updates, Law no. 25, the Petroleum Law, 1955 (Petroleum Law, 1955, hereafter) forms the basis for all technical, commercial, and environmental aspects of petroleum activities in Libya. Law no. 24, 1970 established the National Oil Corporation (NOCORP).
Annex 2 of the Petroleum Law, 1955, contains a model petroleum concession contract that outlines how the commercial and operational principles of early petroleum licenses are to be regulated. The document does not mention specifics related to associated gas, flaring, or venting. Crucial aspects relating to the handling of associated gas are covered in confidential licensing agreements between the government and license holders.
The Model Production Sharing Contract, 2006, mentions the use and disposal of associated gas, but much is left to the notion of compliance with the Good Oilfield Practices, as defined in the model PSC. The model PSC only forms the basis for negotiations between the NOCORP and license holders. The PSCs are individually negotiated and may differ in detail, although they must all comply with the Petroleum Law, 1955. All but one concession agreement have reportedly been renegotiated and converted to PSCs.
Law no. 15, the Environment Law, 2003 (Environment Law, 2003, hereafter) is an update of the original Law no. 7, Protection of the Environment, 1982. At its core is protecting and improving the environment, specifically relating to water, soil, air, and food.
Hydrocarbon and environmental matters are subject to national laws and jurisdiction. Flaring and venting are not directly regulated.
Associated Gas Ownership
All subsurface oil and gas resources are the property of the Libyan state, according to Article 1 of the Petroleum Law, 1955. Licenses in Libya were originally structured as concessions, but PSCs have become the norm with the introduction of the model Exploration and Production Sharing Agreement starting in 2006. In PSCs, title to the contractor’s share of the production is transferred in the form of cost oil and gas and the contractor’s share of profit oil and gas. For associated gas, the transfer of title takes place only if the gas is commercialized (subject to the approval of the development plan).
Regulatory Governance and Organization
The formation of a new government in early 2021 has affected the various regulators responsible for gas flaring and venting. The establishment of the Ministry of Oil and Gas and the Ministry of the Environment is likely to be relevant to flaring and venting. At the time of writing, not all changes had been fully implemented. The information provided in this and the next sections is therefore subject to change.
Within the oil and gas sector, responsibilities are clearly allocated to the minister of oil and gas, who oversees the Petroleum Committee. The ministry also influences the Management Committees supervising the PSCs, given its authority over NOCORP, which sends members to the Management Committee and also chairs it.
The Environmental General Authority was established as an independent and autonomous institution with its functions and responsibilities laid out in the Environment Law, 2003. Following recent changes in the government, the Ministry of the Environment was established. It has assumed responsibility for, and control of, the Environmental General Authority.
Regulatory Mandates and Responsibilities
According to Article 2 of the Petroleum Law, 1955, the Petroleum Committee recommends key decisions on such matters as granting, assigning, renewing, relinquishing, and canceling licenses and concessions to the minister of oil and gas, who ratifies the decisions. The Petroleum Committee also appoints the director of petroleum affairs, with whom it shares monitoring and inspecting powers. The responsibilities of the director of petroleum affairs also cover operational aspects with the license holders, such as tracking exploration activities, approving fiscal assessments, and reviewing technical reports. However, until recently, NOCORP had far-reaching regulatory powers and assumed regulatory functions assigned to the ministry and the Petroleum Committee. Following recent changes in the government, the Ministry of Oil and Gas was reestablished with regulatory powers over the oil and gas industry and authority over NOCORP. The role of the director of petroleum affairs remains essentially unchanged.
The Management Committee, comprising members from NOCORP (which chairs the committee) and license holders, manages PSCs and can issue decisions that are binding on operators. They predominantly cover compliance with the existing regulation, adherence to the Good Oilfield Practices, and the commerciality assessment of associated gas not used in petroleum operations, referred to as excess associated gas in Article 1 of the Model Production Sharing Contract, 2006. All commercial aspects of the PSCs are subject to negotiation between NOCORP and the contractors.
When it comes to environmental matters such as air emissions, the Environment Law, 2003, empowers the Environmental General Authority with monitoring and inspection. These powers could also entail flaring- and venting-related matters, although NOCORP is better positioned to cover environmental matters and private sector counterparts, issues with which it has extensive experience.
Monitoring and Enforcement
Article 2 of the Petroleum Law, 1955, empowers the Ministry of Oil and Gas (mostly through the director of petroleum affairs) to access production-related data. The ministry can also visit production facilities to ensure that operations are being conducted in line with the Good Oilfield Practices, as per Article 11. In cases of noncompliance with the requirements stipulated in the petroleum concession, the license can be revoked, as per Article 18. Article 25 of the Model Production Sharing Contract, 2006, allows for termination of a PSC if there has been a material breach of the obligations and a failure to remedy the breaches in question.
The Environment Law, 2003, gives the Ministry of the Environment (and the Environmental General Authority under it) the right to monitor pollution levels and require emission permits for facilities covered by the regulation.
Flaring or Venting without Prior Approval
Neither the Petroleum Law, 1955 nor the Model Production Sharing Contract, 2006 explicitly bans or allows flaring or venting of associated gas. Article 13 of the Model Production Sharing Contract requires disposal of noncommercial associated gas in accordance with the Good Oilfield Practices. The Management Committee decides whether excess associated gas is classified as commercial or noncommercial.
Authorized Flaring or Venting
See the previous section.
Article 13 of the Model Production Sharing Contract, 2006, requires the Management Committee to approve the development plan for any excess associated gas deemed commercial.
Article 13 of the Model Production Sharing Contract, 2006, assigns the commerciality assessment of excess associated gas to the Management Committee. If the gas is not commercial, NOCORP can exercise the right to take the gas free of charge after separating it from oil.
Measurement and Reporting
Measurement and Reporting Requirements
According to Article 13 of the Model Production Sharing Contract, 2006, metering is required only for excess associated gas in commercial discoveries. Article 2 of the Petroleum Law, 1955 allows the Director of Petroleum Affairs to inspect meters to ensure accuracy.
Measurement Frequency and Methods
No evidence regarding specified measurement frequency and methods could be found in the sources consulted.
No evidence regarding engineering estimates could be found in the sources consulted.
Article 5 of the Model Production Sharing Contract, 2006, requires the operator to maintain operational records (daily and monthly) in line with the Good Oilfield Practices, which also cover excess associated gas in commercial discoveries. There is no requirement to maintain logs for flared or vented gas volumes.
Data Compilation and Publishing
No evidence regarding data compilation and publishing could be found in the sources consulted. However, the Ministry of Oil and Gas is producing overall oil and gas volume reports (not specific to flaring and venting), which are shared with the oil and gas operators active in the country.
Fines, Penalties, and Sanctions
No evidence regarding monetary penalties could be found in the sources consulted.
Article 18 of the Petroleum Law, 1955 states that license revocation is possible for reasons stated in the bilateral commercial agreements with NOCORP. Article 5 of the Model Production Sharing Contract, 2006 requires operators to conduct all petroleum operations diligently and in line with the applicable petroleum and environmental laws and the Good Oilfield Practices. Article 25 allows for the termination of a PSC in the case of a material breach of the contractual obligations, provided that remedies have not been started within 90 days following the receipt of the formal notice. No evidence could be found of license revocation due to poor flaring and venting practices.
No evidence regarding performance requirements could be found in the sources consulted. However, the main performance standards stipulated in the key pieces of regulation revolve are based on the Good Oilfield Practices, as defined in Article 1 of the Model Production Sharing Contract, 2006.
Fiscal and Emission Reduction Incentives
No evidence regarding fiscal and emission reduction incentives could be found in the sources consulted.
Use of Market-Based Principles
No evidence regarding the use of market-based principles to reduce flaring, venting, or associated emissions could be found in the sources consulted.
Negotiated Agreements between the Public and the Private Sector
No evidence regarding negotiated agreements between the public and the private sector could be found in the sources consulted.
Interplay with Midstream and Downstream Regulatory Framework
Article 13 of the Model Production Sharing Contract, 2006, asks the private and public parties involved to use any surplus capacity in processing and transport facilities for excess associated gas, but this request does not constitute a formal requirement.