By Salma El Wardany
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.
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.
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Salma El Wardany – Egyptian/Irish Muslim.
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BLOOMBERG
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Libya NOC declares force majeure on Sharara crude oil loadings following Zawiya explosion
By Carla Sertin
The state oil company’s chairman has said that the incident is being investigated
Libya NOC has declared a state of force majeure on Sharara crude oil loadings at Zawiya port as of July 20, 2019.
The company released a statement noting that the closure is “the result of an unlawful Sharara pipeline valve closure by by an unidentified group between Hamada and the Zawiya port.”
“Criminal activity has required NOC to declare Force Majeure at Zawiya,” said NOC Chairman Mustafa Sanalla.
“Deliberate attempts to sabotage pipelines and production hurt both national oil revenues and critical power supply for everyday Libyans.”
Approximately 290,000 barrels per day will be offline, which Libya NOC estimates at a value of $19mn per day.
Crude oil supply to the Obari power station will stop, as supply from Sharara to the plant requires that a continuous amount of crude to the plant’s storage tank, which is full.
However, production at El Feel oilfield, near Sharara, has not been affected.
The gap in refinery feedstock will be filled by international fuel imports, which Libya NOC says will cause “additional deficit in the fuel budget.”
“Akakus security personnel and engineers are investigating the incident and working to quickly restore production,” Sanalla added.
“The corporation, in partnership with relevant authorities, will find and prosecute those responsible for this unnecessary interruption.”
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Carla Sertin is the editor of Oil & Gas Middle East.
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OilandGas.com
