Blockade At Oil Field In Libya Could Shut In Production

Members of the Petroleum Facilities Guard (PFG) blocked on Wednesday the airfield of the Wafaa oil field in southwestern Libya, the National Oil Corporation (NOC) said on Thursday, noting that it could be forced to shut in all operations at the 40,000-bpd oil field should the blockade continue.

The airfield servicing the oil field was blockaded on September 19, “in an attempt to blackmail Mellitah Oil and Gas Company into awarding an unwarranted catering contract,” said the Libyan national oil firm, which is a joint venture partner in the Mellitah company together with Italy’s oil and gas major Eni.

Mellitah Oil and Gas Company produces around 40,000 bpd of crude oil, and condensate, and 400 million cubic feet of natural gas, dedicated entirely to power plants, NOC said.

“If the blockade continues, the company will be forced to suspend all operations in the Al-Wafaa field and evacuate all employees. A shutdown in the afternoon of September 20th will result in the cessation of gas supply from Al Wafaa to the Al Ruwais power plant,” NOC said, adding that it “demands the immediate end to the blockade and the re-opening of the runway without precondition.”

The PFG and other guards at Libyan oil fields are paid by the state to protect them, and regularly use blockades to extort more money and benefits from the Libyan authorities.

The latest incident at a Libyan oil field highlights the fragile state of the oil industry in the North African OPEC member, where attacks and blockades on oil facilities have frequently shut in oil production and exports.

Earlier this month, several gunmen stormed NOC’s headquarters in Tripoli, killing two employees and injuring 25 others.

A port closure for more than two weeks in June-July blocked 850,000 bpd of Libya’s oil (nearly all Libyan production) from being exported from four ports.

Libya’s July oil production slumped to just 670,000 bpd, as per OPEC’s secondary sources. In August, production recovered to average 926,000 bpd, according to OPEC’s latest monthly report, but the security situation in the country is still fragile, making Libya one of the wild cards in predicting supply in a tightening oil market.

By Tsvetana Paraskova for Oilprice.com

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