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Breaking News:

OPEC Lifts Production in February

Sharara To Return To 300,000 Bpd Production In Two Weeks

The Sharara crude oil field in Libya will recover its daily rate of production to 300,000 bpd within two weeks, Reuters reports, quoting a field engineer. The country’s largest field could produce more than 315,000 bpd but has been plagued by outages, the latest among which lasted almost three months.

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 last week. Originally, locals 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 the locals’ demands for payments, deeming them ransom demands and warning this would set a dangerous precedent. Then, making the situation more complicated, 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 at the end of February 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. Last week NOC said it was working to restore the 20,000 bpd in lost capacity at the field.

Sharara has become the main reason Libya was exempted from the latest round of production cuts and also the main reason the North African country is widely seen as a wild card in global oil price forecasts. Since it accounts for around a third of the country’s total oil output, Sharara, like the export terminals in the Oil Crescent, has become a natural target for various groups vying for power and control over Libya’s oil wealth.

By Irina Slav for Oilprice.com

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