Libya's Biggest Oil Field Said to Be Shut by Gunmen for 3rd Day

(Bloomberg) -- Libya’s biggest oil field remained shut for the third day by an armed group, in the latest disruption to the OPEC member’s efforts to revive its energy industry.

Sharara oil field is still shut by an armed group demanding backpay, the release of some of its members who are under detention and supplies of fuel to the southern region, among other claims, according to a person familiar with the situation who asked not to be identified because they aren’t authorized to speak to media. Late Monday, National Oil Corp. Chairman Mustafa Sanalla said he had given instructions to restart production at the field on Tuesday after talks with tribesmen and some other guards to resolve the issue.

Sharara produced about 234,000 barrels a day before the gunmen forced workers to halt production Sunday. Sanalla had said Libya’s oil output was 800,000 barrels a day on Monday and was due to rise to 1 million barrels a day within 2-3 days after the field restarts.
 
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.

Security, technical and financial challenges are hindering NOC’s efforts to reach its production target of 1.25 million barrels a day this year, Sanalla said on Monday.

Sporadic Disruptions

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 have expressed concern that rising production in Libya and Nigeria, which were both exempt from cutting, is complicating the group’s push to rebalance 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.

To contact the reporters on this story: Salma El Wardany in Cairo at selwardany@bloomberg.net, Saleh Sarrar in Dubai at ssarar@bloomberg.net.

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Rachel Graham