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Libya’s Large Shut-in Oil Field Faces Possible Rival Clashes

Libya oil

A unit of forces loyal to Libya’s UN-backed government in Tripoli has been sent south to secure the country’s largest oil field, Sharara, which has been shut in for nearly two months after it was occupied by an armed group, in what could turn out to be another clash for a major oil asset in Libya between forces loyal to the government in the west and those pledging allegiance to a strongman in the east.

A unit of the Petroleum Facilities Guard (PFG) of the Libyan government of national accord, supported by the United Nations, is heading to Sharara, which has the capacity to pump 340,000 bpd, but which has been under force majeure since December 9, 2018, Qatar-based Al Jazeera TV reported on Wednesday.

Sharara has been under force majeure after armed militia claiming attachment to the local PFG seized control and demanded ransom to re-open it.

Nearly two months later, Sharara remains offline, and Libya’s National Oil Corporation (NOC), which refuses to yield to ransom demands, said in December that “Oil production will now only restart at Sharara after alternative security arrangements are put in place.”  

Last month, forces loyal to eastern strongman General Khalifa Haftar and his self-styled Libyan National Army (LNA) said that they had started a military operation to secure oil sites and facilities in Libya’s south, where Sharara is located.  

LNA has already seized the main city in the southwest, Sebha, and a spokesman for LNA, Ahmed al-Mismari, has told Bloomberg that after seizing the city, the forces would move on to Sharara and other oil facilities in the area. 

Related: Platts Survey: OPEC Production Drops To Lowest Since March 2015

At a speech in London last week, NOC’s chairman Mustafa Sanalla said that “With some reluctance we have concluded that the preferred solution is a professional PFG force managed by NOC.”

“A mixed force might provide a solution within a negotiated security framework. With a robust security framework in place, managed by NOC, Libya will be a much more reliable supplier to the global market and a much more attractive destination for oil and gas investment,” Sanalla said.

Yet, according to Bloomberg, the rival forces haven’t shown they are willing to cooperate to keep the Sharara oil field safely operating.

By Tsvetana Paraskova for Oilprice.com

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