Libya is known for its vast sand dunes and the arid North African climate. Hunting for natural resources other than water was not well-documented in the early European expeditions until Ignazio Sanfilippo, a Sicilian entrepreneur and geologist, decided to expand his sulfate business. After he secured proper funding from the Bank of Rome, his ship arrived at Tripoli, Libya’s capital, in 1910. He told the local authorities (Tripoli was still under the Ottoman Empire at the time) that the mission was to help locals with agricultural techniques. However, he kept his true intentions secret.
Sanfilippo immediately prepared his crew to head south, where reports indicated that there might be an abandoned sulfur deposit in the region. To his disappointment, the sulfur mine of which he dreamt was nothing but a sulfurous body of water where locals had treated their sick camels. Sanfilippo returned to Rome, presented his expedition findings to the authority and requested more funding for what he described as a potentially economic natural oasis.
Sanfilippo went back to Libya in April 1911. His campaign to find sulfur or any other mineral deposits in the country was soon interrupted when the Italian-Turkish War started. One of the first realizations the Italian government made when they won the war and began to colonize the area in 1911 was the need to find more water resources. An early sign of the country’s petroleum potential came in 1915 when an artesian water-well driller reported that he had encountered natural gas west of Tripoli. Gas was not a key commodity in the first decade of the 20th century, and the Italians showed little interest in looking for it.
Ardito Desio
It wasn’t until the 1930s that the Italian government assigned a geology professor, Ardito Desio from the University of Milan, to lead a campaign to find more groundwater to sustain Libyan agriculture. Desio completed the first geological surveys that covered the entire country. He reported to Italo Balbo, the appointed Italian governor in Libya, that he had found some traces of oil in several artesian wells he’d drilled. Desio specifically noted that he believed that the Sirte Basin had good potential for oil exploration. He also documented that oil wells require specific rigs that the Italian government did not have.
News of the 1901 oil discovery at Spindletop and then other areas in Texas had spread all over the world. Drilling success in Texas was partially due to the use of heavy, expensive machinery that was unavailable to the Italians. Whether Balbo reported Desio’s recommendations to the Italian government or not is unclear. Balbo was a young, ambitious, popular Fascist figure in Italy and Libya, which made the Italian dictator Benito Mussolini view Balbo as a threat. Finding oil in Libya would boost Balbo’s reputation. Italy was not a U.S. ally at that time, which might have also played a role in the inability of the Italians to obtain the most advanced drilling equipment. Either way, the hunt for black gold in Libya was put on hold, at least for a while.
New Country, New Dreams
Following the defeat of Italy in World War II, Libya became an independent kingdom in late 1951, ruled by King Idris. The newly formed government published a mineral law in 1953 that granted several international companies the right to commence geological and geophysical surveys. Shortly thereafter, the Libyan government passed its first petroleum law to provide for foreign acquisition and ownership of any natural resources within Libya. Many oil hunters in the region at the time praised this law for its fairness, but it is possible that such generosity from the Libyan government was motivated by the urgent need for cashflow in a country that was then considered one of the poorest in Africa. Many believed that a draft of that law was handed to the interested oil companies for their comments before the law was finalized. Regardless, the petroleum law was the initial major step toward oil discovery in the country.
That first Libyan oil law offered a favorable return on investment to attract investors to the new country whose petroleum potential was unknown. It was not only the fairness of the law that attracted major international oil companies to hunt for oil, but also the need to diversify global oil reserves beyond the established producers such as Kuwait, Iraq, Iran and Saudi Arabia. The new kingdom of Libya was considered a Western ally and was geographically close to the rapidly growing oil market in Europe. The appeal of oil exploration in Libya was not just for the majors, but also independent oil companies, who were allured by the potential of this new petroleum frontier. Nelson Bunker Hunt, a son of the famous Texas wildcatter and tycoon H. L. Hunt, was among the first independents to join the efforts to find oil in the Sahara Desert region.
The First Oil Discovery
By 1957, the Libyan government had awarded oil exploration concessions to many international companies. Esso, British Petroleum and the group of Marathon, Conoco and Amerada Hess (known as Oasis) were among the first of the larger oil companies to explore for oil. Bunker Hunt was awarded Concession 65.
As the news broke of a successful oil well in the Ghadames Basin in neighboring Algeria, Esso drilled its first well in the Libyan portion of that basin in 1957. The Esso exploration team targeted sandstones of the Devonian Tadrart Formation that had proven productive in Algeria. After drilling two dry holes, Esso drilled an oil discovery that flowed at a rate of 500 barrels of oil per day, which was deemed uncommercial. Esso then decided to shift their focus to the Sirte Basin. They moved their camp from the west to an area near the Mediterranean during a journey that took two weeks through harsh Sahara weather conditions covering an area as large as Texas. The year 1958 was not promising, as more dry holes were drilled. Esso was not alone in encountering misfortune – the Oasis group was also discouraged by dry holes. Some oil field wags even described the country as experiencing “a dry hole boom.”
However, in 1959 Esso’s fortunes changed when they drilled their first Libyan gusher with a daily rate reaching 17,000 BOPD. A second well encountered the same very thick, oil-bearing Upper Paleocene dolomite, confirming discovery of the giant Zelten oil field, with reserves estimated at 2.5 billion barrels.
British Petroleum, on the other hand, had a tough time at their concessions. With the big Esso discovery in the Sirte Basin, the British oil company felt the urge to move quickly and make a discovery too. They needed a partner – someone who knew where to find oil. They turned to the Texas wildcatter, Bunker Hunt, whose reputation for finding oil preceded him.
Discovery of the Supergiant Sarir Oil Field
The partnership between British Petroleum and Bunker Hunt soon paid off. They struck oil at the C1 well on Concession 65 in the fall of 1961, flowing 4,000 BOPD. The good news did not stop there, as more oil was discovered at the supergiant Sarir field. With reserves estimated at about 11 billion barrels of oil, it was the largest in Africa at the time, twice the size of the East Texas field, which was owned by the Hunt family.
The Sarir oil field is remotely located almost 400 miles from the coast, requiring pipelines to be constructed to carry and export the oil. British Petroleum chose Tobruk, site of a brutal siege and key Allied victory in World War II, as the oil terminal, and they constructed a 34-inch pipeline to the Mediterranean city.
It was apparent to everyone involved in the oil business in Libya that the country was sitting on large petroleum reserves. The Libyan government announced another bidding round in 1966 and invited all interested majors and independents. Many concessions were awarded to companies that were new to the Libyan oil exploration business, including California-based Occidental Petroleum. This was not necessarily good news for the old, well-established oil players there. They speculated that the Libyan government favored independent companies. Led by the legendary Armand Hammer, Occidental promised to invest some of their profits in the large Libyan agricultural project in the Al-Kufra region.
Oxy promptly brought their seismic crew to the country. The exploration team was interested in carbonate reservoirs and decided to test a prospective horst-block fault structure identified by the seismic surveys. Occidental spudded their first exploration well just six months after being awarded the concession and made their first huge oil strike, Augila field, in late 1966, with a flow rate of 15,000 BOPD. Its reserves were estimated at about 7.5 billion barrels of oil in place.
Occidental’s Success Story
The exploration team proposed another exploration well south of the newly discovered Augila field in Concession 103 that formerly belonged to Mobil. Following the success at Augila, Oxy continued their carbonate exploration play, targeting Paleocene carbonate reef build-ups identified from seismic.
Success breeds success, and Oxy made another strike with the Idris field discovery well that gushed at the extraordinary rate of 75,000 BOPD according to Brady, et al. in AAPG Memoir 30. They hit the reef structure, with a pay zone that was more than 1,000 feet thick, with high porosity and permeability. The Libyan government and Occidental announced the discovery of the giant Idris oil field (now called Intisar) late in 1967. Intisar’s reserves are estimated at 1.8 billion barrels of oil.
With the success Occidental had enjoyed in less than two years, the company decided to build its own 300-mile pipelines from the oil fields to a new oil terminal at Zueitina, near the coastal city of Agedabia, and disregarded a previous plan to use other companies’ pipelines.
While the American companies were successful in finding oil, the Italian state oil company Agip had a tough time, with many dry holes. It took them almost 10 years to strike oil just south of the Augila oil field. In 1967, Agip found oil in the Upper Nubian sandstone with high reservoir quality, declaring the discovery of the Abu Attifel oil field, with recoverable reserves more than 200 million barrels of oil.
In less than a decade, Libya became a major oil producer, the first in Africa and the world’s seventh largest oil exporter according to OPEC. In 1968 the Libyan prime minister, Abdul Hamid Al-Bakkoush, announced the formation of the Libyan General Petroleum Corporation (Lipetco). The new company was authorized to plan and execute the national oil policy.
New Government, New Oil Agreement
Lipetco, which later became the National Oil Corporation of Libya, announced in 1968 that it would enter into joint ventures with some foreign companies. As the state-owned company, Lipetco was to receive 25 percent of the oil initially, which could be increased to 50 percent, depending on the size of the field. More joint venture agreements were announced in 1969.
When Muammar Gaddafi overthrew the weak Libyan monarchy in 1969, the new revolutionary council indicated that it would honor existing agreements with all oil companies. Such an announcement made oil companies in the country feel at ease, but only for a while.
In 1970, the new government was eager to get what it deemed to be a more equitable share of any oil produced in the country. The oil companies fought back, and no agreements were reached. Soon the Libyan government announced that it would cut oil production, from “overproduced” wells. The NOC aimed to increase its share of the oil production and they thought that by putting pressure on the oil companies to reduce their daily production in the name of “conservation and good oil field practices,” the companies would eventually fall into line and accept the new terms.
A few months later, Libya nationalized its oil business. As a result, exploration activity collapsed to less than half of what it was before 1970.
NOC realized that they needed to stimulate the country’s exploration activity again. They developed a new oil exploration and production business model based on a production-sharing agreement which split equity 85:15 in NOC’s favor. NOC relaxed the agreement a bit to 81:19 and allowed companies like Mobil to explore offshore. Braspetro (now Petrobras) was awarded concessions in the Murzuq Basin. It was obvious that NOC and the Libyan government were determined to leave the high-risk exploration to the international operators. This step was not welcomed by many oil operators, but the increase in global oil prices in 1974-75 mitigated the risk.
Nationalization of Libyan Oil
By the mid-1970s, most of the Libyan oil fields were nationalized, and oil companies were forced to accept the new terms to be allowed to operate. NOC’s intention was to have complete nationalization as soon as Libya had the full expertise to operate the industry independently. In 1976, AGOCO, a subsidiary of NOC, made a strike at Al Hamada Al Hamra (the Red Plateau) in the Ghadames Basin, and it was a very welcome discovery for the government and national oil company.
Occidental struck a deal with NOC for a 35-year onshore oil exploration agreement consisting of 19 blocks, or approximately 11 million acres. The agreement gave NOC 81 percent of any oil produced from the newly licensed blocks. Oxy was the only company that was still making commercial discoveries and producing oil in the country, but in 1976 Agip (now Eni) discovered Libya’s first offshore oil, in the Mediterranean Sea at the Buri oil field in the Tripolitania Basin. Buri’s reserves are estimated at 4.5 billion barrels of oil.
Braspetro was awarded a concession in the Murzuq Basin, encouraged by the small oil show Occidental encountered in a well drilled nearby. They acquired a 2-D seismic survey covering an area of 3,000 square kilometers and drilled several wells, resulting in only one sub-commercial discovery from sandstones of the Ordovician Mamuniyat Formation.
By the late 1970s, most American oil hunters had decided to withdraw from the oil business in Libya, mainly for political reasons. This opened an opportunity for others to step in, such as state oil companies from Eastern Europe in particular. BOCO, a state oil company from Bulgaria, was awarded Concession NC-115, and a Romanian state oil company, Rompetrol, was awarded another concession in the Murzuq Basin in the 1980s.
The Power of 3-D Seismic
Oil price instability created considerable downside risk for oil exploration during the 1970s and ‘80s. However, the exploration success rates improved when the industry began to utilize the new technological advancements of offshore 3-D seismic.
Oil hunters in Libya started using the new 3-D seismic technology onshore to improve the geological understanding of the subsurface that was not possible from sparse 2-D seismic surveys. The main target was now the Murzuq Basin, where many geological studies showed that the basin had a viable petroleum system proven by the earlier drilling program, although the discoveries were sub-commercial.
In October 1997, NOC announced the discovery of the Elephant oil field, with recoverable reserves estimated at 500 million barrels of oil. LASMO, an international consortium from UK, Eni and South Korean groups, drilled the wildcat in NC 174. They hit a sandstone layer that is 113 meters thick and oil gushed at a daily rate of 7,500 BOPD, according to Paul et al., 1999.
Looking Ahead
The United Nations imposed sanctions on Libya for its accused involvement in the 1988 bombing of a commercial flight that exploded over Lockerbie, Scotland, killing 270 people. When the UN lifted sanctions in the early 2000s, the doors were once again open for international companies to invest in the Libyan oil sector. In 2005, 51 companies from 27 countries participated in a bidding round, and the winners committed to drilling and investing millions of dollars in the oil sector. The NOC plan was to drill 50 wildcat wells in the next 10 years and acquire thousands of kilometers of 3-D seismic. In early 2007, NOC announced that several oil operators had made discoveries, including AGOCO in the Ghadames Basin, RWE in the Sirte Basin, and Repsol in the Murzuq Basin.
One of the main winners of the 2005 round was ExxonMobil. The U.S. supermajor was awarded several blocks offshore of the Cyrenaica Platform and divulged plans for three deepwater wildcat wells in the Mediterranean. By 2010, two wells had been drilled that were not commercially viable, according to an ExxonMobil senior executive, as reported by Reuters.
The oil business and politics have been inextricably linked since the beginning of oil hunting on our planet. Exploration and production activity declined again in Libya when the country experienced unprecedented political unrest (including the overthrow of Gaddafi) between 2011 and 2020. The country has established relative stability during the last few years, fortunately. NOC announced its plan to increase oil production in the next five to 10 years and has invited interested parties to join the hunt.
One commonality among explorers around the globe is the thirst for exploring the unknown. As Jonathan Rotzien pointed out in his book, “The Explorer’s Mindset,” geoscientists are explorers by nature; they take risks and go further than others. Oil hunters fail before they succeed, but they learn along the way. The history of oil exploration in Libya is a perfect example of their persistence and perseverance.