Officials of the state-owned National Oil Co. said output is currently pegged at around 1.16 million bpd, and production cuts are costing the troubled North African state about $50 million a day -- and could drive off longtime customers.
"The situation's now very dangerous," warned Naji Mokhtar, who heads the energy committee in the General National Congress, Libya's legislative authority.
Regional authorities say Libya, particularly the vast ungoverned Sahara in the south, has become a major stronghold of al-Qaida in the Islamic Maghreb, the leading jihadist force in the region. One of its wings was responsible for the January attack on the In Amenas gas complex in southeastern Algeria in which 37 foreign technicians, along with most of the 40 attackers, were killed in a battle with Algerian Special Forces.
Much of the violence is centered on the eastern capital of Benghazi, a longtime jihadist bastion and cradle of the 2011 uprising against dictator Moammar Gadhafi.
The violence increasingly is spreading to Tripoli, Libya's capital, where rival militia brigades attack government and oil industry facilities.
The NOC disclosed production fell below 1 million bpd in late June because of a wave of shutdowns brought about by constant disruptions by armed militias or protesting workers demanding higher pay and improved work conditions.
Oil Minister Abdelbari Arusi estimates the shutdowns at oil fields, export terminals and refineries have cost the country $1 billion in lost revenues as the government struggles in vain to impose its authority over armed groups in a country awash with weapons from the 2011 war.
All this marks a major downturn since mid-2012, when -- less than a year after Gadhafi was toppled in a NATO-backed revolution -- oil production had been cranked up to around 1.5 million bpd.
That was a major achievement for the Libyans, since the energy sector had been pretty much closed down during eight months of fighting before Gadhafi was brought down and killed.
The energy sector constitutes more than 70 percent of Libya's and provides around 95 percent of its revenues.
Libya sits on proven oil reserves of 47 billion barrels of high-quality crude, the largest in Africa.
A new round of exploration, scheduled before the war erupted in February 2011, could add another 10 billion barrels, but the lawlessness has resulted in major international companies such as BP calling off such plans.
A series of attacks and protest sieges has swept the energy industry in recent weeks. Protesters forced the closure of the Zueitina oil terminal in eastern Libya in May, the fourth shutdown since November 2012.
Export terminals at Tobruk and Ras Lanuf have also been affected.
The El Fil oil field in the southwest -- a joint venture between Libya's NOC and Eni of Italy, the biggest producer in the country -- was paralyzed in late May and again in June by armed protesters. The field, Eni's largest in Libya, produces around 120,000 bpd.
The Gialo field in central Libya was shut down for 17 days by protestors, many of them ex-militiamen, demanding jobs in the oil sector as a reward for bringing down Gadhafi.
Arusi said the shutdown caused the loss of 120,000 barrels of oil a day. It said the closure -- like similar forced closures -- was politically motivated to force the Tripoli government to make concessions to tribal or militia groups demanding jobs and money.
The Sharara oil field in southwestern Libya was shut down in June when an armed group objected to another group being hired to help supervise security.
Sharara, which can pump 350,000 bpd, is operated by Akakus Oil, a joint venture between Libya's NOC and Repsol of Spain.
The electricity problem has taken its toll as well. The Arabian Gulf Oil Co. has not been able to replace power generation equipment for its Sarir and Misla fields in eastern Libya for 15 months.
Output is expected to drop from 380,000 bpd to around 300,000 bpd, a loss of $8 million a day.
The government has brought in a contractor based in London to provide 450 megawatts of electricity using mobile generators, but it's not likely to be enough to solve the problem.