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Oil Producer In Libya: It’s A Day-To-Day Struggle To Keep Pumping

Libya

Continued clashes in Libya and an escalation of hostilities could threaten the oil production of Wintershall Dea in the North African country, Mario Mehren, the chief executive of the European oil and gas group, told Russian agency TASS in an interview, echoing analyst comments that Libya could be the next sudden supply outage on the global market.  

Wintershall Dea’s offshore production is not exposed to risks from fighting on the ground, but the onshore production, the main output for the company in Libya and for the country, could come under threat in case the situation worsens, Mehren said.  

Wintershall Dea pumps just over 50,000 bpd onshore, Mehren said, but warned “It is a day-to-day struggle and we do not know how long we can keep that production up under the given the circumstances.” 

Wintershall Dea’s production capacity in Libya is 80,000 bpd, but output has been restricted and intermittent since the summer of 2013 due to the often tense situation in the country, the company says, noting that “the continued tension in the country affects our operations.”

While the oil market is fixated on the U.S.-China trade war for signs of demand, and on Iran, Venezuela, and the Middle East for signs of more supply disruptions, investors have not fully priced in the increased risk that Libya’s fighting could result in a serious oil supply outage, analysts said last month.

Related: Small Crude Build Sends Oil Lower 

The security situation in Libya has materially worsened this spring after eastern strongman General Khalifa Haftar ordered in early April his Libyan National Army (LNA) to march on the capital Tripoli. The self-styled army has been clashing with troops of the UN-backed government in a renewed confrontation that could escalate and threaten to disrupt, once again, Libya’s oil production and exports.

Libya’s National Oil Corporation (NOC), the internationally recognized state oil company, started to warn as early as in April that hostilities could threaten production, and this time, the situation could be worse than at the start of the civil war in 2011.    

By Tsvetana Paraskova for Oilprice.com

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