Libya Oil Output Drops to 5-Month Low on Biggest Field Halt
(Bloomberg) -- Libya’s oil production slumped to a five-month low as the North African supplier’s biggest field stopped pumping crude just weeks after re-opening from an earlier unplanned halt.
The OPEC member’s output dropped to 750,000 barrels a day from 985,000 after an armed group forced workers at the Sharara field to stop pumping, a person familiar with the matter said, asking not to be identified because they lack authorization to speak to the media. Sharara produced about 235,000 barrels a day before the halt, the person said.
National Oil Corp. declared force majeure at the field, citing “unrest, that makes it out of control,” the state producer said in an emailed statement. Force majeure, a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control, is effective from Oct. 1 and doesn’t apply to the loading and unloading of oil products, the NOC said. The halt at Sharara is yet another reminder of the challenges Libya faces in trying to restore and maintain oil output after years of internal conflict. The country, which holds Africa’s largest crude reserves, is currently producing at its lowest level since April, data compiled by Bloomberg show. Libya was pumping 1.05 million barrels a day in August just before armed men closed a pipeline linking the field to a port and causing Sharara to halt pumping for more than two weeks.
Sharara has endured sporadic shutdowns and disruptions this year due to protests, power blackouts and security issues. The giant field in western Libya, run by a joint venture between the NOC and Repsol SA, Total SA, OMV AG and Statoil ASA, is crucial to the nation’s oil recovery. Output had reached a four-year high in July before a spate of shutdowns at various fields stalled the recovery.
The partial revival in Libyan production has coincided with efforts by the Organization of Petroleum Exporting Countries and other producers to cut output to rein in a global glut. Iran and the United Arab Emirates are among OPEC nations that express concern that rising production in Libya and Nigeria, which were both exempt from cutting, is complicating the group’s push to re-balance the oil market and prop up prices. OPEC agreed in November to let Libya and Nigeria pump at will due to their internal strife.
Libya pumped 1.6 million barrels a day before a 2011 revolt led to the collapse of central authority and years of fighting among rival governments and militias vying to control its energy wealth. Libya isn’t planning to join any agreement to curb output until it reaches and maintains its target of pumping 1.25 million barrels a day by December, two people familiar with the situation said in July.
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