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No End In Sight For Libya’s Oil Struggles

Predicting Libya’s future course is a head-scratcher for any oil analyst, things genuinely start to go steeply downhill the exact moment when some sort of trust is restored and people start dreaming about good things finally coming their way. Your humble servant, too, was surprised by the drastic turn for the worse in Libya, having predicted that the El Sharara incident would not jeopardize Libya’s future output. Well, it did, and it did so at a moment when everyone saw Libya as one of those bright OPEC spots where production growth could be possible. Despite all the international lobbying and pressure, the 315kbpd El Sharara field, Libya’s largest, remains shut since December 8, 2018 with no clear end in sight.

The Sharara and El Feel takeover seemed like straightforward extortion tactics – confronted with the prospect of seeing roughly 390kbpd of Libyan output cut off (the El Feel field depends on electricity supply from El Sharara, thus, if the latter is taken over by militiamen, El Feel goes off stream too), the government would acquiesce to tribal demands for more investment and better social services. And for quite some time it seemed that this would work – several days before Christmas, the Tripoli government claimed it had reached an agreement with representatives of the relevant militia, holding out the promise of 1 billion Libyan dinars ($700 million) spent on the improvement of social services in the south, to no avail.

Dealings…




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