Libya's Oil Disruptions Widen as Two More Fields Halt Output

Libya's Oil Disruptions Widen as Two More Fields Halt Output
Two more oil fields in Libya are being closed after an armed group took over pipelines to both deposits, further disrupting the OPEC nation's plan to boost crude production.

(Bloomberg) -- Two more oil fields in Libya are being closed after an armed group took over pipelines to both deposits, further disrupting the OPEC nation’s plan to boost crude production.

El Feel, or Elephant, stopped production, Wessam Al-Messmari, an office manager for the Petroleum Facilities Guard that is protecting the field, said Sunday by phone. State-run National Oil Corp. declared force majeure at the deposit, according to a person familiar with the situation who asked not to be identified because the information isn’t public.

The Hamada oil field will gradually stop pumping through Monday because of the pipeline closing, Arabian Gulf Oil Co. spokesman Omran al-Zwai said Sunday. Force majeure was also declared on Hamada, he said. Force majeure is a legal clause protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. An armed group closed the pipelines to Hamada and El Feel, according to a person familiar with the situation.

Libya revived its oil production and exports before the recent disruptions. In July, crude production was at a four-year high and exports were the most in three years, according to data compiled by Bloomberg. While the expansion has helped Libya’s oil-dependent economy, the Organization of Petroleum Exporting Countries is trying to cut global supplies. That effort has been undermined by recovering output at OPEC members Libya and Nigeria.

Libya’s biggest field, Sharara, has been shut for about a week after an armed group closed the pipeline that linked the deposit to an export terminal, Al-Messmari said at the time. The field is still not pumping, a person familiar with the matter said Sunday.

Libya, which holds Africa’s largest crude reserves, pumped 1.02 million barrels a day in July. It was producing 1.6 million barrels a day before a 2011 revolt set off years of fighting between rival governments and militias.

El Feel is operated by a joint venture between Italy’s Eni SpA and Libya’s NOC. It has an output capacity of 90,000 barrels a day. Sharara, which has a production capacity of 330,000 barrels a day, is run by a joint venture between Libya’s NOC and Repsol SA, Total SA, OMV AG and Statoil ASA.

To contact the reporters on this story: Salma El Wardany in Cairo at selwardany@bloomberg.net; Hatem Mohareb in Libya at hmohareb@bloomberg.net. To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net Claudia Carpenter.

Copyright 2017 Bloomberg News.

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