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Libya’s Largest Oilfield Restarts After 3-Months Of Suspension

Sharara

Libya’s largest oil field, Sharara, is back in operation after almost three months of suspension, the Wall Street Journal reports, citing unnamed sources familiar with the situation.

The field was originally closed for production in December, when clashes between militant groups forced the National Oil Corporation of Libya to institute a force majeure, which was only lifted yesterday.

The groups that occupied Sharara in early December with demands for better economic conditions and power supply security. The occupation lasted until early February, when the Libyan National Army, a group affiliated with the eastern Libyan government, took control of the field. The force majeure remained in place as the NOC refused to yield to demands for payments, arguing this would set a dangerous precedent.

Then, however, the LNA faced the Petroleum Facilities Guard, an old adversary and a group loyal to the UN-recognized Libyan government. The situation was resolved only last week with mediation from the United Arab Emirates.

According to NOC’s chairman, Mustafa Sanalla, the three-month blockade of the field had cost it US$1.8 million and 20,000 bpd in lost production capacity as a result of vandalism and looting.

In a statement, the state oil company said the venture operating the field had "received written assurance from the officials from the Libya National Army "that all individuals subject to Public Prosecutor arrest warrant have been removed from the field and will not be readmitted to the site. Additional security measures for on-site staff are being implemented, with perimeter security and safe "green zones" a priority,"

Sharara has the capacity to pump 340,000 bpd, which is about a third of Libya’s total oil production when the field is in operation. This importance of Sharara has made it a frequent target for various groups and their grievances and ambitions, turning Libya into a swing producer despite its relatively low production rate of just above 1 million bpd before the latest Sharara outage.

By Irina Slav for Oilprice.com

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