Libya boosted oil production to more than 1 million barrels a day, a milestone for the North African country after civil war all but shut its energy industry.
The OPEC member, home to Africa’s largest crude reserves, ramped up production in the past six weeks amid a truce between rival military forces. It was pumping 800,000 barrels a day last week, and the state-run National Oil Corp. said Saturday that output now exceeds the million-barrel level. That’s the first time the landmark has been reached since early January.
Libya’s resurgence — it was producing less than 100,000 barrels a day in early September — has taken oil traders by surprise and weakened prices just as renewed coronavirus lockdowns in Europe and accelerating cases in the US stifle energy use. Benchmark Brent crude has slumped 40% this year and fell 3.6% to $39.45 a barrel on Friday.
The speed of Libya’s oil recovery is a “huge achievement,” the NOC said in a statement. Still, the company said it faces “very big financial difficulties,” which will make it tough to repair dilapidated and damaged oil facilities.
The NOC also warned it might not be able to sustain current levels of production because “some entities” were trying to hinger its efforts. While Libya’s warring sides are meeting this month to appoint a unity government, there’s still plenty of disagreement between them and no guarantee they’ll strike a permanent peace deal.
Even so, the extra Libyan barrels flooding the market are an unwelcome complication for OPEC+, a coalition of the Organization of Petroleum Exporting Countries and other producers such as Russia. The group was set to increase output by almost 2 million barrels a day in January — part of a plan to ease cuts that began in May at the height of the pandemic. But it may be forced into a delay with crude prices under pressure again.
Libya aims to pump 1.3 million barrels a day by the beginning of 2021, NOC Chairman Mustafa Sanalla said in an Oct. 31 interview. Although its strife exempted it from the OPEC+ supply cuts, the Arab nation will coordinate with other members, Sanalla said. So far, there’s been no suggestion from the group that Libya should lose its exemption.
The country’s energy sector was mostly shuttered in mid-January when Khalifa Haftar, a Russian-backed commander based in the east, blockaded ports and fields. Haftar, who was battling the United Nations-recognized government of Prime Minister Fayez al-Sarraj, lifted his blockade in mid-September after winding down hostilities in June.
By Bloomberg
Image: Reuters
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