Libya Oil Production Picks Up After Pipeline Leak Fixed

Libya’s oil output is picking up again after a pipeline leak that caused a brief reduction was fixed.

Production at the OPEC member’s Waha Oil Co. is gradually rising following repairs on the main pipeline between the Samah oil field and the Es Sider port, according to two people with direct knowledge of the situation who asked not to be identified because they weren’t authorized to speak to the media.

Output is likely to return to normal later today after the company earlier cut it by about half to 140,000 barrels a day, they said. Libya began reducing production at fields operated by Waha over the last two days because of leaks, Mustafa Sanalla, chairman of the country’s National Oil Co., said in an online conference.

At Sharara, the country’s biggest oil field, production has also dropped by about 50,000 barrels a day over the past two weeks, Sanalla added, without saying when it might be restored. The combined outages briefly totaled more than 200,000 barrels a day, or almost 20 percent of Libya’s production.

Libya holds Africa’s largest crude reserves, but it’s struggled to pump a fraction of the oil it produced under late dictator Moammar Qaddafi. Fighting between rival factions has put the country’s oil fields, ports and workers in the firing line, and faltering sales have starved the nation of the income needed to rebuild its infrastructure. Freeing up access to investment would help expand the country’s output beyond previous levels, Sanalla said.

‘Tremendous Challenges’

“The NOC is facing tremendous challenges in the rehabilitation and restoration of oil installations,” Sanalla said. “The lack of funds needed for the projects” and the country’s fragile security situation hurt its ability to complete needed work and upgrades, he said.

That means the country is missing out on taking full advantage of oil prices that have surged by 40% this year. Production cuts by the Organization of Petroleum Exporting Countries and partners like Russia have pushed crude to about $70 a barrel as economies exit coronavirus-linked lockdowns and energy demand recovers.

Libya pumped 1.14 million barrels a day in May, according to data compiled by Bloomberg. The country wants to boost production capacity to 2.1 million barrels a day over the next few years but faces enormous obstacles to that aim, Sanalla said. Analysts surveyed by Bloomberg estimate the country can pump at most 1.3 million barrels daily.

©2021 Bloomberg L.P.

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