Libya Gunmen Shut Two Key Oil Fields, Crushing Hopes of Revival

(Bloomberg) -- Two of Libya’s biggest oil fields have been shut down again by gunmen, dashing hopes the war-torn country might revive its energy industry after a five-month halt.

The Sharara field, the nation’s largest, and the El-Feel deposit are offline again following incursions by armed groups. Their shortlived re-opening underscores Libya’s unpredictability as an oil supplier and the fragility of a nascent resumption of exports. The nation has produced little crude since January amid a civil war that’s blocked or shut down almost all of its oil ports and fields.

Libya’s National Oil Corp. said Wednesday that an armed group had forced workers at the El-Feel field -- run by a joint venture with Italy’s Eni SpA -- to stop production, only a few days after it had restarted operations. On Monday, the nearby Sharara site was also stormed by gunmen and forced to halt twice.

The moves prompted the state-run NOC to reinstate an export ban it had lifted earlier this week at the two deposits, declaring force majeure on loadings.

At Sharara, a “criminal group dared to enter the field with heavy weapons,” NOC Chairman Mustafa Sanalla said in a statement on Tuesday. They “directed weapons against our loyal Libyan workers, who are making tremendous efforts to try to prevent Libya from resorting to banks to borrow to feed its people.”

The North African nation’s energy industry has been dogged for almost a decade by power struggles and fighting following the ouster of dictator Muammar Qaddafi in 2011. Any revival will be closely tied to the fortunes of Khalifa Haftar, the militia commander trying to consolidate his control over the country.

The Russian-backed general effectively rules Libya’s eastern and southern regions, and has been trying to conquer Tripoli in the west for more than a year. His supporters halted almost all the country’s oil production in January, sending exports plunging to about 90,000 barrels a day from 1.2 million a day. The collapse has cost the oil-reliant nation billions of dollars in lost revenue.

Sharara -- a joint venture between the NOC and international oil companies -- and El-Feel together were producing about 400,000 barrels a day, about a third of what Libya was pumping before the January shutdown.

A pipeline exporting natural gas to Italy was also briefly closed down on Wednesday after gunmen forced workers to halt it, a person with direct knowledge of the situation said. An Eni spokesman later said that “the situation has returned to normal and the plant has resumed its regular operations.”

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