Libyan Oil Output Is Set to Rebound as Biggest Field Restarts

(Bloomberg) -- Libya’s oil output, hampered by sporadic shutdowns at fields and ports, is on track to resume its recovery as the OPEC nation’s biggest crude deposit started pumping after a three-day forced halt.

The Sharara field re-opened on Wednesday and is restoring production, the state producer National Oil Corp. said on its website. NOC lifted force majeure at the field as of Wednesday and is able to resume delivering Sharara crude to customers, it said in an emailed statement. NOC Chairman Mustafa Sanalla said Monday on Libya TV that the nation’s daily output will reach 1 million barrels within days of the field’s re-opening.

Sharara, in western Libya, pumped about 234,000 barrels a day before gunmen on Sunday forced workers to halt production. The armed group was demanding back pay, the release of some members who were under detention, and supplies of fuel. It wasn’t immediately clear if Libyan authorities had met the group’s demands.

The three-day halt highlights the hurdles for Libya as it tries to reboot oil production after years of political division and internal conflict. The country with Africa’s largest crude reserves was pumping 1.05 million barrels a day in August just before armed men closed a pipeline linking Sharara to a port and caused the field to stop pumping for more than two weeks. Increasing production from Libya may complicate OPEC’s push to re-balance the oil market by urging producers to limit output.

Four-Year High

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

Sharara has had to halt pumping several times this year due to protests, power blackouts and security issues. The giant field, 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 shutdowns at various fields stalled the recovery.

A 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 about rising production in Libya and Nigeria, which were both exempt from cutting. 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 triggered 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 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, Bruce Stanley