Salma El Wardany and Hatem Mohareb 6/21/2022
(Bloomberg) — Libya’s oil production has risen in the past week to around 700,000 to 800,000 barrels a day, according to Energy Minister Mohamed Oun.
Oun, who gave the updated estimate on Monday, said on June 13 that the OPEC member’s output was down to 100,000-200,000 barrels a day. Production in Libya, which has Africa’s largest oil reserves, has been volatile since mid-April amid an increase in political tension and protests at energy fields and ports.
Libya’s decline in crude production has been steep, with the nation pumping an average of 1.2 million barrels a day just last year. Major importers in Europe were hoping it would be able to raise that figure to help counter supply constraints elsewhere. Oil has surged almost 50% in 2022 to $110 a barrel, mostly due to the fallout from Russia’s invasion of Ukraine.
The increase in Libya’s output in recent days is partly due to the nation’s biggest field, Sharara, ramping up, according to two separate people with knowledge of the matter. The southwestern deposit is operated by Libya’s National Oil Corp. in a joint venture with Spain’s Repsol SA, TotalEnergies SE of France, Austria’s OMV AG and Equinor ASA of Norway. It can pump around 300,000 barrels daily at full capacity.
Sarir, a large eastern field, is also producing more, the people said. Output at Agoco, the company which operates Sarir, has reached about 270,000 barrels a day after Sarir restarted on June 16, they added.
More Outages Possible
Still, output could plummet again in the next few days as Waha Oil Co., which operates in the east of the country, may have to halt production entirely due to protests, according to people familiar with the matter.
The company has already curbed production by 80,000 barrels a day to 210,000, the people said. That’s because crude storage tanks at the Es Sider port used by Waha Oil are full due to vessels being unable to load. One such tanker is the Ohio. Protesters prevented it from picking up oil and have instructed it to leave the terminal.
Earlier this month, demonstrators forced workers to shut down Es Sider and Ras Lanuf, another key oil port. Since then, Waha Oil has been producing crude intermittently.
Political Crisis
Libya’s parliament-backed prime minister, Fathi Bashagha, said the nation has little chance of holding elections this year, raising the prospect of the oil outages lasting for months. The nation has been mired in conflict since the fall of dictator Moammar Al Qaddafi in 2011. It’s now facing a standoff between rival politicians, with Prime Minister Abdul Hamid Dbeibah resisting demands from some lawmakers to resign after they declared Bashagha as premier in February.
Bashagha has set up a new government in the city of Sirte following clashes in Tripoli, the capital, between militias loyal to him and others who back Dbeibah.
The North African nation was meant to hold a presidential election in December, but the process was delayed with just days to go, dealing a blow to peace efforts. Creaky oil facilities, already struggling to maintain production, have been the target of protests in recent months.
There’s also a power struggle in the oil sector. The relationship between Oun and NOC chairman Mustafa Sanalla, who has for years run the energy sector and signed agreements with international oil companies, has been strained since the government in Tripoli restored the Ministry of Oil in March 2021.
The ministry’s attempt to assert greater control sparked an internal crisis. Oun asked the government to dismiss Sanalla several times and change the NOC’s board. Oun has complained about the state-run company not sending production figures to the ministry.
