Libyan oil production sinks by 330,000 bpd as Sanalla blames ‘gangs’ for shutdown

Libya’s oil production has reportedly sunk by about 330,000 barrels per day (bpd) as a result of the shutdown of two major oilfields.

According to Argus Media, the disruption is affecting flows of crude oil from Libya’s biggest oilfield, Sharara, as well as from El Feel. Sharara usually yields around 270,000-300,000 barrels per day (bpd) of oil and El Feel up to 70,000 bpd but may have been operating below full capacity when production stopped on March 3.

The disruption has probably brought Libyan oil output, reported to be at 1.2mn bpd as of the end of February, down to about 900,000 bpd. It is also costing the country more than LYD160mn ($34.67mn) per day, according to an official from National Oil Corp. (NOC) cited by Argus.

Additionally, the shutdowns are certain to affect Libya’s output of refined petroleum products. Crude from the Sharara field is a key source of throughput for the 120,000 bpd Zawiya refinery, and NOC’s chairman Mustafa Sanalla said on March 6 that the stoppages were “making it impossible” for his company to meet its fuel supply commitments.

“As such, we are obliged to declare the state of force majeure in line with standard practice in the oil industry,” he said in a press release.

Sanalla also blamed gangs led by Mohammed Al-Bashir Al-Garj for the valve closures that have cut off crude oil flows from Sharara and El Feel and claimed that the same armed groups had been responsible for previous shutdowns at Sharara.

Additionally, he suggested that unscrupulous individuals were seeking to steal oil in order to benefit from recent price increases on world crude markets.

“Who benefits from these closures which come after the price jump that exceeded $100 per barrel? The same gang closed these valves between 2014 and 2016, which coincided with a similar price boom,” Sanalla charged. “Suspicious links and indications strongly suggest that the closures are driven by hidden hands aiming to drag the country into chaos.”

He further stated that NOC had urged Libyan authorities to take action against those responsible for disrupting oil flows from the two fields. “A communication has been submitted to the Public Prosecutor’s Office to take deterrent and targeted measures to identify the planners, executors and beneficiaries behind this criminal act of theft and sabotage,” he said, according to the press release.

As of press time, it was not clear whether NOC’s suggestion had garnered any support.

Argus noted the possibility that the shutdown at the oilfields had been linked to an incident on February 27, in which members of the Tuareg tribe mounted a road blockade and threatened to cut off the main access route to Sharara unless they were granted national ID numbers.

Reuters, meanwhile, quoted an oil official in Tripoli as saying that Sharara and El Feel had been taken off line by members of a militia from the town of Zintan. Local tribal leaders are currently holding negotiations with the militia in the hope of securing a deal that will allow production to resume, said the official, who spoke on condition of anonymity.