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Libyan oil production will be reduced by another 200,000 bpd this week because of urgent repairs on a pipeline, the Libyan National Oil Corporation said this weekend.
The news comes on the heels of the latest production outage at Sharara—Libya’s largest oil field—caused by the Petroleum Facilities Guard, which was protesting the removal of an official from the company that operates the field, Argus reported at the time.
Sharara can produce some 300,000 bpd of crude, which makes it a frequent target for protesters. Besides Sharara, Argus source told the news agency that two other fields had also been shut down amid the latest rift between the PFG and the National Oil Corporation.
This means that total production will be down by more than half a million barrels daily this week. According to Bloomberg, which estimates Sharara’s output at 350,000 bpd, the slump in production is even greater, at up to 700,000 bpd.
According to NOC, the pipeline repairs work will cost more than $107 million in lost revenues.
Libya’s oil infrastructure has suffered years of neglect, and the field shutdown for the pipeline repairs is unlikely to be the last one. In fact, NOC’s chairman Mustafa Sanalla said, “the infrastructure in the oil sector has become in a situation where it is not possible to continue its regular operation due to the large number of leaks and the deterioration of surface facilities, due to the consequences of illegal closures in the past years, as well as the absence of approved budgets for the sector, which It will ensure the preservation of the integrity of the assets of the national oil sector.”
Despite the challenges, the Libyan government plans to boost oil production to 1.4 million bpd by the middle of the year. Late last year, oil minister Mohamed Oun said the ministry was considering a reward-and-penalty system for oil field operators in order to motivate them to invest in more production.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com