Libya's Political Chaos Hits Oilfields, Output Threatened

Libya's escalating political struggles threatened to derail the recovery in the country's oil sector, as a commander in charge of security at its biggest field said forces loyal to a rival government in Tripoli had forced out his men.

TUNIS/BENGHAZI, Libya, Nov 10 (Reuters) - Libya's escalating political struggles threatened to derail the recovery in the country's oil sector on Monday, as a commander in charge of security at its biggest field said forces loyal to a rival government in Tripoli had forced out his men.

The National Oil Corp, based in Tripoli, said the El Sharara field would reopen by Wednesday, but the growing chaos in the country has cast doubt on Libya's ability to maintain its recent output rebound, as rival groups grapple for control.

Tripoli's involvement, if confirmed, could threaten an oil sector that so far had largely weathered Libya's most recent political turmoil, in which an armed group took control of the capital, installing its own government and parliament and forcing the internationally-recognised government to the east.

"The manager of the field insists reopening the field just because he wants to make good relations with the invaders," said commander Abdulhamid Kraeer, who belongs to a brigade from Zintan allied to the government in the east and opposed to the Tripoli rulers.

"But it is difficult to reopen the (El Sharara) field as there will be, I guess, an escalation," he said.

Libya's oil production rose above 900,000 barrels a day in September, sharply above lows of 100,000 barrels a day in June.

But it now looks increasingly under threat, and has already fallen to around 500,000 bpd at most. The rebound contributed to a near 30 percent drop in international oil prices since June.