• 4 minutes US-backed coup in Venezuela not so smooth
  • 7 minutes Why Trump will win the wall fight
  • 11 minutes Oil imports by countries
  • 13 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 3 hours Climate Change: A Summer of Storms and Smog Is Coming
  • 47 mins Teens For Climate: Swedish Student Leader Wins EU Pledge To Spend Billions On Climate
  • 1 day The Quick Read On MBS's Tour of Pakistan, India And China
  • 1 day BMW to add 2,000 more jobs at Dingolfing plant
  • 1 day Iran Starts Gulf War Games, To Test Submarine-Launched Missiles
  • 1 day Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 2 hours An expected? Saudi Arabia Would Need Oil At $80-$85 A Barrel To Balance Budget
  • 10 hours Washington Eyes Crackdown On OPEC
  • 1 day Saudi A to Splash $100 Bln on India
  • 2 days NEW FERUKA REFINERY
  • 1 day Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil
  • 10 hours Can the World Survive without Saudi Oil?
  • 1 day Venezuela: Nicolas Maduro closes border with Brazil
Alt Text

Can China Save South Sudan’s Oil Sector?

South Sudan is well positioned…

Alt Text

The End-Game For Libya’s Oil Crescent

As Libya’s two opposing sides…

Alt Text

A Storm Is Brewing In The Southern Gas Corridor

While Russia looks to circumvent…

Rory Johnston

Rory Johnston

Rory Johnston is a Master of Global Affairs student at the University of Toronto’s Munk School of Global Affairs where he focuses primarily on the…

More Info

Trending Discussions

Libya: the Fundamental Feeding the Fear

Oil prices are at a six-month high and no one knows exactly what is going to happen in Syria nor how it will ultimately affect oil prices in the coming weeks. However, in addition to fear, the recent spike in oil prices also reflects more fundamental supply factors: Libya, a major regional producer, has seen its production completely collapse over the past month.

Libyan Oil Production

Libya’s crude oil is of extremely high quality and is a favourite feedstock for European refineries. The loss in Libyan production has put increased strain on an already tight global oil market—OPEC’s spare capacity stands at a low 2.31 million barrels per day, or a mere 2.5% of global consumption—which serves to increase the fear that any mistake in Syria could cause an oil shortage.

Related article: Saudi Prince Bandar Schemes in Syria

Yesterday, Tarek Didaa, the head of the Libyan Ministry of Oil’s press office, told the Libya Herald that oil exports now stand at an anaemic 160,000 barrels per day. Production has fallen almost 90% from 1.6 million barrels per day only a few months ago, levels not seen since the 2011 civil war that ousted long-time strong man Muammar Gaddafi.

While production bottomed out during the war, the majority of the oil infrastructure remained undamaged and the transitional government was able to quickly ramp up production to near pre-war levels. Libya had been producing between 1.4 and 1.6 million barrels per day for most of 2012 and through the first quarter of 2013.

The trouble began when a series of labour strikes began spreading through Libya’s oil fields and export terminals. The strikes started as a call for higher wages and better working conditions by members of the Petroleum Facilities Guard—the armed force tasked with defending the country’s oil infrastructure. However, targeting Libya’s oil assets is now the tactic-of-choice of any and all who want to voice a grievance or simply make a play for cash and power.  

“Militia groups are behaving like terrorists, using control over oil as political leverage to extract concessions,” said Dr. Elizabeth Stephens, head of political risk at Jardine Lloyd Thompson. The central government is attempting to regain control of its oil assets but Tripoli’s power in the East is tenuous at best. "Practically the government is dead, technically it is still there," said Noman Benotman, president of the counter-terrorism think-tank Quilliam.

Related article: Syria Barely a Blip on International Oil Market

This precipitous decline in oil production is especially dire for Libya, where petroleum exports accounted for over three-quarters of GDP last year. The recent shutdowns have cost the central government over $2 billion and have hurt its previously healthy fiscal position. The trickle of oil still making it out for export is coming through the last two functioning terminals, Zawia and Al-Hariga but, with the current security as it is, only time will tell how much longer these remain operational.

Lacking any security guarantees, investment in Libya’s oil industry has completely disappeared and international firms are simply trying to limit their losses as they pull out. The Swiss-based group Petromatrix stated that “we are currently witnessing the collapse of state in Libya, and the country is getting closer to local wars for oil revenues.”

If this continues, it is hard to see how we can avoid what Abdelbari al-Arusi, Libya’s oil minister, called Libya’s “plunge into darkness.”

By. Rory Johnston




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • ali on September 04 2013 said:
    mr
    Rory Johnston i really think u have no idea about whats really happening in Libya us the Libyan people in east Libya been suffering over 45 years . why u call us “Militia groups and behaving like terrorists , when the poor people of Libya asked for investigations on corruption inside the oil minstery , sir i think u should find out the real truth before you right something that the whole world will read .. u are not covering the story on the ground u just writing an articular from story's you hear on line ..
  • Carlos on September 04 2013 said:
    Mr. Ali, with all due respect, I think if you in Libya do not stop the mess you transformed the country, in a little time people will very soon discover and think by themselves that in times past, during Khadafi rule, things were better.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News