Libya sets sights on build in oil production

OPEC member is exempt from a production cut deal and could upset the balancing act.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Dec. 21, 2016 at 8:32 AM
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TRIPOLI, Libya, Dec. 21 (UPI) -- A national oil company in Libya said two major oil fields are now reconnected to pipeline infrastructure and oil is flowing freely for the first time in years.

The National Oil Corp. confirmed the western Sharara and El-Feel oil fields were reopened and connected to pipelines after a blockade that lasted almost two years. NOC Chairman Mustafa Sanalla said in a statement the reopening came as a result of national efforts following years of civil conflict.

"There were no payoffs and no backroom deals," he said. "For the first time in nearly three years all our oil can flow freely."

Sanalla said the milestone would bring another 175,000 barrels of oil per day to national production within a month and another 270,000 bpd within three months. Combined, production capacity for both fields is 420,000 bpd, the chairman said.

Libya is a member of the Organization of Petroleum Exporting Countries exempt from an agreement to cut production starting in January. The agreement is aimed at restoring balance to a market favoring the supply side. Before the announcement from the NOC, OPEC said Libya and Nigeria, another producer with an exemption, contributed most to production gains in November.

Industry sources reporting to OPEC said crude oil production from Libya has doubled since August to about 600,000 barrels per day as national forces gained control over oil ports in the country.

"Free from OPEC output restrictions, Libya has effectively been given carte blanche to increase oil production to its pre-2011 crisis level of 1.6 million bpd," PVM's Stephen Brennock wrote.

Sustaining that level, however, would depend on all of Libya's facilities, not just Sharara and El-Feel.

Libyan oil production has been fluid since the end of the era of Moammar Gadhafi. Production averaged 470,000 bpd in 2014 before slowing to a trickle. If NOC estimates are accurate, however, the new output would the about what OPEC's smallest producer, Gabon averaged for total production in November.

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