Libya’s Crude Oil Output Grows As LNA Restores Control Of Key Facilities

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Libya’s production of crude oil has increased above 1 million barrels per day (b/d) for the first time since early June, according to unnamed sources cited by S&P Global.

The increase came mainly from the Sharara oil field, which produced 250,000 b/d during the week of August 13^th, going up from 218,000 b/d from the previous week.

The 340,000 b/d field was shut down abruptly on July 14^th after gunmen entered a substation and kidnapped two staff members. Wells in the surrounding area were shut down as a precaution and workers evacuated.

Sharara is made up of three producing areas in the southwestern Murzuq basin. Two were brought back online relatively quickly in July, boosting output to around 200,000 b/d. However, the third area, known as Station 186 had a more challenging security situation, according to the unnamed source, cited by S&P Global.

Station 186 was shut down after the abduction by an unknown group, forcing Libya’s National Oil Corporation (NOC) to cut output.

On July 25^th, a control station at the giant Sharara oil field resumed operation, however the foreign engineers who assist in the operation have not returned due to security reasons, according a field engineer cited by Reuters.

Tripoli-based NOC operates Sharara in partnership with Repsol, Total, OMV and Equinor , formerly known as Statoil. The field has had security problems in the past, including raids during which mobile phones and vehicles were stolen. The oilfield is one of Libya’s biggest export grades, the field also feeds the 120,00 b/d Zawiya oil refinery on the country’s northwest coast.

The increase in crude oil production is the result of operations by the Libyan National Army (LNA), which on June 21^st recaptured the country’s largest oil port and a neighboring refinery, respectively Sidra and Ras Lanuf. Jadhran, allied with Chadian mercenaries and an Islamist group, known as the Benghazi Defence Brigades (BDB), which has links to Al-Qaeda and Ansar Al-Sharia, took the terminals from the LNA in a surprise attack. However, the LNA recaptured them. At that point NOC lifted a force majeure at the terminals and shipments were cleared to resume. However, in late June exports fell from over 1 million b/d to about 600,000 b/d.

On June 25^th, the LNA commander Khalifa Haftar announced the handover of the recaptured oil installations under the control of his forces to his allies in the east Libya administration after retaking them from militias. Mop up operations for “enemy” holdouts were also completed on June 25^th.

The increase in crude oil output and successes of the LNA come as there is an increase in armed groups threatening Libya’s political transition. On August 10^th, UN experts cited by Washington’s Top News said that the “predatory behavior” of armed groups in Libya are posing a threat to the forming of a national government and ending the lawlessness in the country. The experts also warned that “the use of violence to exert control over Libya’s state institutions might result in a return of armed confrontations in Tripoli.” They further warned that Libyan Investment Authority, National Oil Corporation and Central Bank of Libya “were targets of threats and attacks, impacting on the performance of Libya’s oil and financial sectors.”

The increase in production is a promising step for Libya. However, the armed groups still fighting the LNA and endangering the on-going government transition are posing threats not only for its citizens, but also to its economy.