Pipeline Woes Hit Libya Oil Production

News

Posted – 19th January 2021

A leak that forced the shutdown of an oil pipeline in Libya has reduced its recovering oil production by as much as 200,000 bpd, Bloomberg reports, noting the challenges the country faces in ramping up its oil output. The pipeline carries oil from two fields operated by Waha Oil to the Es Sider oil port.

Libya’s crude oil production rebounded from less than 100,000 bpd in early September to over 1.2 million bpd by November as eastern government-affiliated forces lifted an eight-month oil port blockade that had stifled Libya’s oil industry.

The National Oil Corporation also had plans to boost production further to at least 1.7 million bpd, its chairman Mustafa Sanalla told the Wall Street Journal in November. These developments interfered with the hopes of Libya’s fellow OPEC members of higher prices thanks to the deep OPEC+ production cuts agreed earlier in the year.

Analysts, however, have dismissed the worry that Libyan oil would offset the cuts, noting that the situation in the North African country remained quite fragile politically, which meant heightened uncertainty about the future of its oil production.

Indeed, just last week, members of the Petroleum Facilities Guard—a group that has also taken part in internal squabbles between the east and the west—delayed the loading of at least one crude oil cargo and threatened to blockade the port of Hariga unless their salary demands are met.

This is the latest in a long string of export disruptions caused by the PFG, which at one point used to control all the oil ports and hold off exports until the eastern-affiliated Libyan national Army wrestled control of the facilities from them and handed it to the NOC.

Now the state oil company is facing a whole other problem resulting from the negligence of transport facilities. The company said the pipeline that had to be shut down “could no longer continue to operate due to the large number of leaks, and it’s worn out,” and blamed it on lack of state funding for its regional subsidiaries.

“What happened with Waha today happens daily with other companies that suffer from a budget shortage. They are also under the threat of having to reduce their production and to even halt it completely.”

OILPRICE.COM – Charles Kennedy

The Libya Consultancy does not imply any association with, nor endorsement by or of the publisher of this article

 

 

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