Libya has restarted production at its largest field, Sharara, as peace talks began between eastern and western forces.
The national Oil Corporation announced it had lifted the force majeure on Sharara after reaching an agreement with the Petroleum Facilities Guard to “end the entire obstacles that face Al Sharara Field in a way that guarantees there will be no security breaches and in a way that enables the National Oil Corporation to lift the force majeure status and resume production in Al Sharara Oil Field.”
Libya is currently producing about 300,000 bpd and Sharara could add up to 200,000 bpd more after the lifting of an oil port blockade by the eastern-affiliated Libyan National Army. From below 100,000 bpd, oil output reached close to 300,000 bpd in a matter of two weeks. And plans are to continue ramping up: the governor of Libya’s central bank has called on the industry to raise oil production to 1.7 million bpd, which would be more than the country produced before the oil port blockade – 1.2 million bpd.
The National Oil Corporation, which has been saying for months the blockade is costing Libya billions in lost oil revenues, earlier this month reported it had booked in July the smallest monthly revenue this year. At $38.2 million, the July figure was down from $2.1 billion a year earlier. In August, the NOC said, revenues improved thanks to a temporary lifting of the force majeure it had imposed on exports for the duration of the blockade, to $90 billion. This was down from $2 billion for August 2019.
Libya’s production ramp-up plan fly straight in the face of OPEC’s plan to continue keeping a lid on production amid still sluggish demand improvement and persistently low oil prices. In fact, following Libya’s production increase, reports have emerged that Saudi Arabia was mulling over cancelling a planned relaxation of the cuts by about 2 million bpd from January next year. The relaxation is part of the April agreement between OPEC+ members but that agreement probably factored in higher prices as a result of the deep cuts so far this year.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Could Big Oil’s Shift To Renewables Be Good For Prices?
- The World’s First Fully Driverless Vehicle Ready To Hit The Roads
- What Is Slowing The Oil Market Recovery?
