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Oil Markets On Edge As Libya Brings Back 250,000 Bpd

Oil Barrels

Crude oil production at the Sharara field in western Libya – the country’s biggest – has resumed, an anonymous source told Reuters, and the force majeure that the National Oil Corporation had placed on the field could be lifted today.

Last week, unnamed armed factions had blocked production at the Sharara and Wafa fields in western Libya, cutting the country’s total output by 252,000 bpd. Sharara alone produced 220,000 bpd before the shutdown, making up a huge chunk of Libya’s overall 700,000-bpd production. It started pumping oil after a two-year pause last December.

When Sharara was restarted in December 2016, NOC said that it planned to increase output from it to the 330,000 bpd it pumped before the civil war, aiming for a national total of 900,000 bpd in the next few months and 1.1 million bpd at the end of 2017.

The anonymous source told Reuters that the latest shutdown of the field was due to armed militia who blocked the pipeline that fed crude from Sharara to the Zawiya export terminal. After intervention from NOC’s chairman Mustafa Sanalla, the militia men agreed to release the pipeline, so the oil flow could be resumed.

The pipeline that caused the latest force majeure used to be under the control of the Petroleum Facilities Guard, which held it, like the four oil terminals in the Oil Crescent, as bargaining chips with the authorities. The PFG relinquished control of the pipeline last December, three months after it left the four oil terminals, surrendering control over them to the Libyan National Army.

Last month saw fresh clashes between the LNA and another group, the Benghazi Defense Brigades, which temporarily froze operations at two of the ports, Es Sider and Ras Lanuf, shutting down several fields that fed crude into the terminals. Although these have since reopened, the political situation in Libya remains highly unstable, and future disruptions to oil supply are very likely. Related: Russia Reaches 2/3 Of Oil Output Cut Target

Before the 2011 war, Libya pumped 1.6 million barrels of crude daily.

By Irina Slav for Oilprice.com

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