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Libya’s Oil Output Tops 800,000 Bpd For The First Time Since 2014

Libya

Libya’s crude oil production has exceeded 800,000 bpd for the first time since 2014, and could average up to 1.2 million bpd for the rest of this year if oil flows freely, National Oil Corporation (NOC) chairman Mustafa Sanalla said on Wednesday in a statement that could fuel more fears of rising global supply.

Just yesterday, reports suggested that Libya’s output had reached 780,000 bpd.

Furthermore, a commercial dispute between Libya and Germany’s Wintershall had shut in more than 160,000 bpd of output, costing the country nearly US$250 million monthly, Sanalla said.

We would be producing almost 1 million bpd if it were not for Wintershall’s refusal to implement terms it agreed to in 2010,” NOC’s chairman noted.

According to a Sanalla statement sent to The Wall Street Journal, the dispute between Wintershall and NOC is over liabilities that Wintershall owes to Libya dating back to 2008.

According to a Wintershall spokesman, who spoke to The Journal, “there is no claim over money allegedly owed by Wintershall.”

The German company’s concession agreements with Libya are still valid and in full force, the spokesman noted.

Wintershall operates in eight onshore oil fields in the eastern Sirte Basin, and production has been stopped several times since 2013. When production had resumed, it was in limited quantities, according to the company’s website. In its 2016 production report, Wintershall said that in Libya, it was only able to produce again in onshore concession 96 from 16 September 2016, owing to the difficult political conditions, and it resumed production at a low level of 35,000 BOE per day.

According to a person familiar with the dispute and documents seen by The Journal, Libya and Wintershall are in disagreement over new-field contracts implementation.

The Presidency Council, Libya’s unified government, has overstepped its authority when it decided that it should be negotiating the deals with foreign oil companies, NOC’s Sanalla said in today’s statement. Related: Production Cuts vs Innovation – Why OPEC Has Lost The Oil Price War

“Resolution 270 was written to allow Wintershall to evade its obligations. I have asked the Presidency Council to withdraw Resolution 270 for this reason and because it oversteps their authority. It has declined, and has instead sided with Wintershall against NOC,” Sanalla said, referring to the powers to negotiate contracts.

If the issue is soon resolved, the extra 160,000 barrels per day would put Libya near the 1 million bpd mark and could shake OPEC’s resolve.

By Tsvetana Paraskova for Oilprice.com

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