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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

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Why Libya’s Largest Oil Field Remains Shut Down

Libya’s largest oil field, Sharara, will not reopen until the armed group that has been occupying it for nearly two months backs down and leaves, the chairman of the National Oil Corporation (NOC), Mustafa Sanalla, said on Tuesday.

The Sharara oil field, with capacity to pump 340,000 bpd, was shut down in early December and has been under force majeure since then, after armed militia claiming attachment to the local Petroleum Facilities Guard (PFG) seized control and demanded ransom to re-open it.

More than a month later, Sharara remains offline, and NOC which refuses to yield to ransom demands, said as early as last month that “Oil production will now only restart at Sharara after alternative security arrangements are put in place.”  

Sharara’s shutdown will result in daily production losses of 315,000 bpd, plus a loss of 73,000 bpd at the El Feel oil field because it depends on Sharara for electricity supply, NOC said in December, noting that the “combined daily cost to the Libyan economy of this unnecessary shutdown” is US$32.5 million.  

Earlier this month, forces loyal to eastern strongman General Khalifa Haftar and his self-styled Libyan National Army (LNA) said that they had started a military operation to secure oil sites and facilities in Libya’s south, where Sharara is located.  

Referring to Sharara, NOC’s Sanalla said in London on Tuesday that “The armed group attempting to hold NOC, and Libya’s economic recovery to ransom, must leave the field before NOC will consider restarting production.”

Related: Political Crisis In Venezuela To Reshape OPEC

Commenting on the military campaign in Libya’s south, Sanalla said at a Chatham House conference, as quoted by Reuters:

“It is my concern that a sequence of events has been set in motion with unknowable consequences for Libya, and NOC.”

Expressing concern about the developments in southern Libya and Sharara, Sanalla said earlier this month: “The restoration of security at NOC facilities is paramount to avoid further sabotage and theft of equipment ... Oil facilities must remain out of the purview of military operations and not used for political or economic leverage.”

By Tsvetana Paraskova for Oilprice.com

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