OPEC's burden grows, as Libyan output reaches highest mark since 2014
CAIRO (Bloomberg) -- Libya is pumping the most oil since October 2014 as the OPEC member restores output amid progress in mending the nation’s political divisions. The increase adds pressure on the world’s biggest producers who just signaled they may extend production cuts as oil slumps.
The North African country’s production has reached about 780,000 bpd, according to a person familiar with the situation who asked not to be identified for lack of authorization to speak to the media. Libya was producing about 700,000 bpd at the end of April, Jadalla Alaokali, a board member at state producer the National Oil Corp., said then.
A revival in Libyan output adds to the challenge that the Organization of Petroleum Exporting Countries and other major producers face after agreeing last year to pump less crude to stem a glut and shore up prices. In separate statements just hours apart on Monday, Saudi Arabia and Russia said publicly for the first time they would consider prolonging their output reductions for longer than the six-month extension OPEC is widely expected to agree to when the group meets on May 25. Libya was exempted from OPEC’s cuts because of its internal strife.
Political divisions, clashes between armed groups and closures of fields have disrupted output in Libya as the country with Africa’s largest crude reserves struggles to revive its most vital industry. Libya’s feuding administrations agreed last week to unite state institutions and build a national army under civilian leadership after two days of talks in Abu Dhabi.
Oil recovery
Libya’s largest oil field, Sharara, is currently pumping about 225,000 bpd, the person familiar said. Crude from Sharara started flowing to the Zawiya refinery following a three-week closure.
El Feel, the oil field also known as Elephant, restarted last month as well, after having been halted since April 2015. The resumption of operations at Sharara and El Feel, both in western Libya, has helped lift total national output to the highest since October 2014, when the country pumped 850,000 bpd, data compiled by Bloomberg show.
Fighting in early March caused two of Libya’s main oil terminals to close, forcing a number of fields to stop pumping. The ports, along the central coast, have since reopened. Libya pumped as much as 1.6 MMbpd before an uprising in 2011 led to a plunge in output, and it’s currently one of the smallest producers in the Organization of Petroleum Exporting Countries.
Sharara has a capacity of 330,000 bpd and is operated by a joint venture between Libya’s National Oil Corp. and Repsol SA, Total SA, OMV AG and Statoil ASA. El Feel, operated by a joint venture between the NOC and Eni SpA, can pump as much as 90,000 bpd.
The NOC will sell about 600,000 bbl of Mellitah blend crude from El Feel in a tender to be announced after mid-May, the person familiar with the situation said. The Mellitah sale will be the first since the field halted in 2015, the person said.
