Libya restarts Wintershall's oil fields to boost national output

CAIRO (Bloomberg) -- Libya’s state energy producer National Oil Corp. announced the restart of production at Wintershall’s Sara oil fields more than two months after they were closed by protests, in the latest sign that the OPEC nation’s oil industry may be stabilizing.

The fields will increase the North African country’s crude output by 57,000 bpd, according to an NOC statement on Sunday. Wintershall confirmed that crude output at the fields resumed on Jan. 21, according to an emailed statement from the company on Monday.

The shutdown since November resulted in the loss of 4.4 MMbpd of production at a cost to the economy of $281.5 million, NOC said in the statement. The municipality of Jikharra had decided to reopen the area following pressure from NOC and the public prosecution, it said. The fields, located in the Jikharra area, were closed in early November due to protests by people demanding jobs and more local development projects.

Since the 2011 war that ousted former leader Muammar Qaddafi, Libya has been carved up among dozens of militias, with rival administrations in the east and in Tripoli. Infighting since 2014 crippled the production and exports of oil, Libya’s main source of income, devastating the import-dependent economy. Oil output has since been increasing and reached last year its highest level in four years. Output has stabilized at about 1 MMbpd over the last quarter, hampered only by isolated disputes and shutdowns.

Crude Exports

NOC Chairman Mustafa Sanalla said the restart in Jikharra was a setback for a parallel Libyan oil administration based in eastern Libya, which for several years had tried to gain control over the country’s central and eastern oil facilities and export the crude independently. It failed to do so as major international oil companies only recognize the Tripoli-based NOC.

“The perpetrators and others considering using the tactic should remember this is a very serious offense for which there is no statute of limitations,” Sanalla said in the statement.

The restoration of Libyan oil despite the country’s divisions has put the spotlight on Sanalla, whose influence has waxed in a country dependent on oil exports. In another sign the sector is stabilizing, Royal Dutch Shell and BP have agreed to annual deals to buy Libyan crude.

Production remains well below the level of 1.6 MMbpd reached before the revolt in 2011, however, and efforts to increase output and exports are complicated by Libya’s commitment to an OPEC campaign to reduce a global surplus.