Could shale reserves be Libya’s next oil & gas frontier?

Chevron’s next move in Libya: Libya’s state oil company, the National Oil Company (NOC), is partnering with US oil giant Chevron for a joint study on the country’s unconventional oil and gas resources. The pair signed an MoU for that effect, agreeing to explore sedimentary reserves in the Sirte, Murzuq, and Ghadames basins.

Uh, what exactly are unconventional resources? These are usually oil and gas resources trapped in hard-to-exploit natural conditions and are more expensive to extract as a result. That could be shale oil and gas trapped in low-permeability and porosity reservoir rocks — as in the case of Libya — which requires techniques like horizontal drilling and hydraulic fracturing (also known as fracking) to create enough pressure to release the fossils. Other unconventional forms could be found in conventional reservoirs, but still need unconventional extraction techniques due to their high viscosity, such as sand oil — you can find lots of that in Venezuela and Canada.

But why go unconventional if there’s a slew of traditional exploration opportunities? The answer lies in the timeline and the current global energy landscape. While it's more capital-intensive, the time from exploration and drilling to bringing production online is usually much shorter for shale oil and gas. We’re talking days or weeks vs. months or years for conventional reservoirs. That means that shale production developers have better revenue recovery timelines — and with global oil and gas prices expected to be elevated at least until the end of the year, there’s good reason that an international oil company like Chevron wants to act quickly on shale opportunities.

And while the market case for fracking is solid with record-high oil prices, it’s too early to take this development seriously. For starters, Chevron is yet to put boots on the ground in Libya and is currently adopting a wait-and-see approach despite already securing drilling concessions in the Sirte basin back in February, as we previously reported. And after all, we are talking about an MoU looking at assessing the potential rather than an actual shale exploration/drilling operation.

The possible environmental costs are something that Libya must reckon with, though. Fracking is known for its risk of contaminating groundwater due to its use of high-pressure techniques to force the shale oil and gas out. For a country that depends on underground water for 97% of its water supply, any large-scale fracking without strong oversight to ensure site integrity could be risky for Libya’s water security.

IN CONTEXT- The US has been pushing for economic and political reform in Libya, largely motivated by business opportunities in the country, we’ve been told. The latest US success in Libya came in early April when Libya’s two governments signed on to a unified budget — Libya’s first in 13 years — raising hopes for investors that doing business in the country may get less complicated. Many businesses struggle with profits repatriation in the country, and over a decade of parallel spending by Libya’s two governments ultimately triggered a currency crisis back in 2025.

Also from Libya

Another oil discovery, another viability test: A consortium composed of Algeria’s Sonatrach, Oil India, and the Indian Oil Corporation struck oil in block 95/96 of the Ghadames Basin, the Indian Petroleum Ministry said. The new well — the fifth discovery in the concession block since the consortium resumed exploration last October — achieved daily production of 13 mn cubic feet during pumping tests, which means the well is now moving to economic viability assessment.

Background: The consortium first secured drilling rights for eight wells in the concession block in 2008. At least six have been drilled as of early April.