July 5 (UPI) -- The start of natural gas production off the coast of Libya is a breath of fresh air for a country facing significant security risks, a company chairman said.
A joint venture between Libya's National Oil Corp. and Italian energy company Eni said Thursday that natural gas production started at the second phase of the Bahr Essalam project off the coast of Libya.
The Bahr Essalam gas field delivers natural gas to an onshore treatment plant and then into the national supply chain. Mustafa Sanalla, the chairman of the Libyan company, said the startup shows international companies remain confident about working in the country.
"This [startup] will support the development of the domestic market and reduce costly liquid fuel imports," he said in a statement. "This strategy will free up significant financial resources; essential given the enormity of challenges across the country."
The start of gas production comes less than a week after the NOC suspended operations at oil loading terminals because of challenges to its authority. Libya fractured along multilateral lines in the wake of civil war in 2011 that culminated with the death of long-time ruler Moammar Gadhafi.
The United Nations recognizes the NOC as the legitimate authority over natural resources. Last week, the U.N. Secretary General called for calm and the return of authority to the NOC.
Oil production from Libya, a member of the Organization of Petroleum Exporting Countries, is down at least 75 percent from its recent average of close to 1 million barrels of oil per day. Speaking to a U.S. diplomat on Tuesday, Sanalla said the blockades were costing the country about $67 million per day because of the loss of oil production.
Production from the Bahr Essalam gas field came three years after a final investment decision. Two more wells will start production within a week and seven more are expected by October.
Libyan Prime Minister Fayez al-Saraj, on hand for the project launch, said gas production offshore adds value to the national economy.
"In the past, we missed huge investment opportunities due to the lack of budget," he said. "However, today we are committed more than at any time to encourage investment in the oil sector, and to grant promising opportunities to global giants on a commercial basis that serves the interest of this partnership, and creates growth that gives new hope to the Libyan youth."