Libya Oil Output at Lowest in Five Months as Some Exports Halted

(Bloomberg) -- Libyan oil production dropped to about 1 million barrels a day, its lowest in roughly five months, after an unidentified group reportedly closed a valve and shut down the North African country’s largest field.

The declaration of force majeure at Sharara, the field in southwestern Libya, removed 290,000 barrels a day, worth an estimated daily $19 million, from the country’s production, the state-run National Oil Corp. said in a statement.

The overall production figure was confirmed by two people with knowledge of the situation who asked not to be identified because the information isn’t public. It would be the OPEC member’s lowest output since February, according to data compiled by Bloomberg.

Crude oil shipments from the port of Zawiya, west of the capital, Tripoli, have been halted as a result of the closure. Sharara is operated by a joint venture between the NOC and Total SA, Repsol SA, OMV AG and Equinor ASA, known formerly as Statoil ASA. Production at the nearby El Feel oilfield is unaffected, the NOC said.

Libya, with Africa’s largest reserves, has endured major disruptions to its output and exports as battles and blockades among rival armed groups and militias hindered efforts to revive production. Earlier in July, the NOC said production was about 1.3 million barrels a day -- its highest in six years but still well below its output before the civil war that overthrew dictator Muammar Gaddafi in 2011.

Brief Shutdowns

Sharara has experienced brief shutdowns in recent years as some of Libya’s myriad armed groups press political or financial demands. Production was frozen for three months late last year after state guards and armed residents seized it to demand payments, leading to losses of about $1.8 billion.

Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

“Deliberate attempts to sabotage pipelines and production hurt both national oil revenues and critical power supply for everyday Libyans,” NOC Chairman Mustafa Sanalla said in a statement. Security personnel and engineers are investigating the incident and working to swiftly restore production, he said.

Sharara’s suspension will also cut fuel shipments to Obari power station and the government will have to source alternative supplies, the NOC said.

To contact the reporter on this story: Salma El Wardany in Cairo at selwardany@bloomberg.net

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Michael Gunn, Bruce Stanley

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