Militias Shut Down Libya’s Biggest Oil Field Before Election
Militias Shut Down Libya’s Biggest Oil Field Ahead of Election
(Bloomberg) -- Libya suspended crude exports from two ports after militias shut down the OPEC member’s biggest field days before an election.
State-owned National Oil Corp. on Monday said the country’s production had fallen by more than 300,000 barrels a day. The company will halt shipments from the port of Zawiya, which handles crude from Libya’s biggest field of Sharara. It also declared force majeure, a clause in contracts allowing exports to be suspended, at Mellitah, a port linked to the Wafa field.
The closures are set to lower the nation’s output to less than 1 million barrels a day. Any sustained drop from Libya, which sits on Africa’s biggest oil reserves, could counter efforts by the Organization of Petroleum Exporting Countries and its partners to boost production.
The disruption came after members of the Petroleum Facilities Guard, a paramilitary force meant to protect energy facilities, shut a valve on a pipeline taking crude from Sharara to Zawiya. The PFG did the same on a pipeline running to Mellitah, a person familiar with the matter said.
The shutdowns come ahead of a presidential election scheduled for Dec. 24 that’s meant to end more than a decade of conflict and civil war. There are doubts the vote will go ahead, as disputes over the eligibility of candidates threaten to sow fresh turmoil.
Oil prices have rallied about 35% this year as economies recover from the worst of the coronavirus pandemic. Still, the spread of the omicron variant has weighed on the market, with Brent crude slumping on Monday to around $70 a barrel.
Libya’s output has averaged 1.2 million barrels a day this year, according to data compiled by Bloomberg. The government is trying to attract billions of dollars of investment from foreign energy companies, including France’s TotalEnergies SE and Italy’s Eni SpA, in a bid to raise exports to 2 million barrels per day within six years.
Zawiya, near the capital city of Tripoli, is still open and workers can load oil in storage onto tankers, said the person familiar with the matter. Sharara pumps around 300,000 barrels a day at full capacity, while Wafa can produce 45,000 barrels per day.
©2021 Bloomberg L.P.