Libyan oil production gains limited

Wood Mackenzie found damage to port facilities puts a ceiling on Libyan oil production.
By Daniel J. Graeber  |  Oct. 20, 2017 at 6:07 AM
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Oct. 20 (UPI) -- War damage to port facilities in Libya could constrain production to around 1.25 million barrels per day, analysis from consultant group Wood Mackenzie found.

Secondary sources reporting to the economists at the Organization of Petroleum Exporting Countries said Libya produced an average 923 million barrels of oil per day last month, down from the July peak of 1 million bpd.

"Wood Mackenzie believes Libya may now be reaching its near-term production limits and future growth will be gradual," the consultant group said in an emailed report.

In early October, the EUobserver, citing a "restricted" report from the European Union's Border Assistance Mission in Libya, described lingering fractures remaining in Libya six years after civil conflict led to the death of long-time ruler Moammar Gadhafi. Without some sort of unified political solution and an end to conflict, progress for Libya will be limited.

Wood Mackenzie found various stalemates mean different things for different energy companies. Companies with headquarters in North America are a bit more wary of risk, while those in Europe have been relatively steadfast in their commitments.

Last week, the chairman and board of directors at the Libya National Oil Corp. met in London with representatives from Spanish energy company Repsol to review production planning, security challenges and ways to mitigate risk.

Wood Mackenzie found that damage from militant attacks and other consequences of war at the ports of As Sidrah and Ras Lanuf will constrain Libyan oil production at 1.25 million bpd, which the NOC set as a year-end target.

"Reaching this would be quite an achievement," the report read.

Libya is exempt from an OPEC-led effort to balance an over-supplied market for crude oil with managed production declines so it can steer oil revenue toward national security efforts. Wood Mackenzie said even keeping production at 1 million bpd would be considered a success, but enough of a win to keep Libya from spiraling deeper into crisis.

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