June 14 (UPI) -- An agreement with German energy company Wintershall means Libya has a better chance of meeting oil production goals, a national oil company said.
The Libyan National Oil Co. said it signed an agreement with Wintershall that outlines a resumption of oil production from some of its license areas on an interim basis. NOC Chairman Mustafa Sanalla said the agreement gives Wintershall enough of a production share to cover its costs and ends a costly shutdown.
"I hope we can now get on with the business of meeting our oil production targets without interruptions," Sanalla said in a statement.
Libya is a member of the Organization of Petroleum Exporting Countries and is exempt from its multilateral deal to curb production because it relies in part on oil revenue to finance national security objectives.
In its monthly market report for June, OPEC said the recovery in Libyan crude oil production was part of the reason why traders were worried about excess supply on the market.
Secondary sources reporting to OPEC economists said Libya produced an average 730,000 barrels per day in May, an increase of 32 percent from the previous month. Sanalla said the production rate as of this week was 830,000 barrels per day.
Referencing the need to continue negotiating on lingering contractual issues, a spokesman for Wintershall said both sides were hoping for a quick resolution.
"We have agreed a swift resumption of production, while taking into account the interests of all sides, with the NOC," the official told UPI.
Sanalla added that total production should hit the 1 million barrels per day mark by the end of July.
Wintershall has legacy operations in Libya and was one of the first to resume operations in the wake of the downfall of Moammar Gadhafi. The NOC said in May that contractual issues with Wintershall were standing in the way of production momentum.