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Libya restarts 300,000 b/d Sharara oil field after months of shut-in

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Libya restarts 300,000 b/d Sharara oil field after months of shut-in


400,000 b/d of output could be online in a matter of weeks

El Feel field could be next to reopen

UN-backed government moving eastwards, near key oil terminals

  • Author
  • Eklavya Gupte
  • Editor
  • Claudia Carpenter
  • Commodity
  • Oil

London — Libya's largest oil field Sharara restarted production this weekend, after the 300,000 b/d site was shut-in for almost five months due to an oil blockade, stateowned National Oil Corp. said June 7.

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Libyan production of 400,000 b/d could be online soon as the 75,000 b/d El Feel oil field is also likely to open soon, sources said.

NOC said the Sharara field restarted on June 6 beginning at a capacity of 30,000 b/d.

"Production at the field is expected to return to full capacity within 90 days due to the damages resulted by the very long shutdown," NOC said in a statement.

A key pipeline valves which connect the Sharara and El Feel fields with the Zawiya export terminal and refinery reopened on June 5, paving the way for a resumption of crude output.

The restart occurred just as the OPEC+ alliance agreed to extend 9.6 million b/d of production cuts to July, brushing aside Mexico's defection from the pact and receiving pledges of improved compliance from Iraq, Nigeria, Angola and Kazakhstan

Libya is currently exempted from the historic cuts, and any new production could complicate efforts by the 23-member coalition to rebalance the market.

GNA success

The recent military victories by the UN-backed Government of National Accord against the self-styled Libyan National Army is causing many tribal groups and militias to switch allegiances back to the GNA.

NOC was in talks with the tribal groups that control the 300,000 b/d Sharara and 75,000 b/d El Feel fields over the past few days.

The Petroleum Facilities Guard protecting the fields was until recently supporting LNA led by Khalifa Haftar. But as the LNA has lost ground, the PFG is now under GNA command, sources said.

A spokesman for NOC was not immediately available for comment.

NOC exported some crude and condensate from its storage at the Zawiya terminal last week, the first shipment since mid-January. NOC is now expected to lift force majeure on Sharara crude loadings out of Zawiya in the next few days.

Libyan crude production was around 70,000-80,000 b/d until a few days ago, less than a tenth of what it was producing before Jan.18 when the LNA orchestrated an oil port blockade. Output was the lowest level since September 2011, when a civil war tore the country apart and led to the downfall of Colonel Moammar Qadhafi.

Despite recent official military gains by the official government, the LNA still controls key oil infrastructure, mainly the eastern oil export terminals of Es Sider, Ras Lanuf, Brega, Zueitina and Marsa el Hariga. This means around two-thirds or around 800,000 b/d of Libyan crude still remains offline.

There is also a concern that GNA's move eastwards, especially toward the eastern oil crescent where the key oil terminals are located, could pave the way for more conflict and instability.

Libya holds Africa's largest proven reserves of oil and its main light-sweet Sharara and Es Sider export crudes yield a large amount of middle distillates and gasoline, making it popular with refineries in the Mediterranean region and northwest Europe.

(Updates with NOC confirmation of restart.)