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North Sea Oil Faces Crisis

North Sea oil has a…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Libya Faces Disaster If Oil Blockade Continues

Libya is facing financial disaster if the Libyan National Army does not lift the oil port blockade, the Prime Minister of the UN-recognized Government of National Accord said as quoted by local media.

“The continuation of the shutdowns will result in a catastrophic financial crisis,” said Fayez Serraj. “Losses from the oil shutdowns have exceeded $1.4bn. The figure is increasing every day.”

The blockade began in mid-January when a group of paramilitary formations affiliated with General Khalifa Haftar’s Libyan National Army occupied the country’s oil export terminals along with pipelines and fields. The blockade came amid continued fighting between the LNA, which is loyal to the eastern Libyan government and the forces loyal to the Government of National Accord.

Since then, Libya’s oil production has slumped from over 1.2 million bpd to less than 200,000 bpd. In late January, NOC’s chairman Mustafa Sanalla told Bloomberg that Libya could lose all of its oil production if the blockade was not lifted soon, and the latest production figures suggest that output may indeed be heading for zero, with no free storage space left to stock oil from still-producing fields.

“Certainly, in light of the continued closure of oil facilities, the 2020 budget will face a deficit and [it] will drop to its lowest levels,” Prime Minister Serraj said.

For now, however, there does not seem to be a light at the end of the tunnel. Despite rounds and rounds of talks, the warring sides cannot seem to find common ground for a ceasefire that would last long enough for oil production to start recovering.
“We warned against using oil as a pressure card,” Serraj also said, as quoted by Reuters. The PM added the Government of National Accord will prosecute the parties that initiated the blockade, although he provided no details as to how this will happen.

By Irina Slav for Oilprice.com

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