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Oil supply from Libya's Sarir to Hariga halted after pipeline attack

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New threat to Libyan oil unity as rift within NOC opens up

Oil supply from Libya's Sarir to Hariga halted after pipeline attack

London — Crude production at Libya's major Sarir field has been halted following an attack by saboteurs on the pipeline linking the field with the port of Marsa el-Hariga in eastern Libya, bringing the country's remaining onshore oil production almost to a complete standstill.

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The loss of Sarir output means Libyan production will now likely have fallen below 150,000 b/d and exports from its onshore terminals effectively halted.

Production had already fallen to around 350,000 b/d in early 2014 -- less than one third of the country's capacity of around 1.5 million b/d -- due to fighting near key oil infrastructure and attacks on fields, terminals and pipelines.

Output continues from the offshore El Jurf and Bouri fields, which have been unaffected by the recent unrest across mainland Libya, at an estimated 100,000 b/d.


The latest attack near Sarir occurred early Saturday and resulted in a sudden drop in the pipeline's operating pressure to 130 psi from 450 psi, forcing NOC to halt pumping operations.

Firefighters were sent to the scene of the explosion, NOC said, with a spokesman adding Monday: "It will be fixed within a week."

Sarir is operated by the Benghazi-based NOC subsidiary Agoco, which also operates the 20,000 b/d Tobruk refinery. Operations at the refinery have also now been halted, NOC said.

Sarir had been one of the few fields in Libya left producing, and NOC had offered heavy discounts on the crude in a bid to keep international buyers interested in the grade.

MARKET REACTION

The new disruption to what was left of Libya's oil production came as little surprise to traders of the country's crude.

"It's a mess there," one trader said.

He added that buyers would again seek out oil from elsewhere in the Mediterranean sweet crude market as a result.

"It may give more of an appetite for alternatives," the trader said.

Another trader said exports of Sirte oil had been averaging around 110,000-120,000 b/d before the disruption, and that the crude was still being offered out of storage.

"They say that they are repairing the line," he said. "It would take a few days before things are pumping again."

Liftings are expected to continue while the stocks are depleted so that loadings are only being delayed, not canceled, so far.

The Official Selling Price for Sarir -- arguably Libya's most reliable land-based export stream -- for February was slashed by $1/b to Dated Brent minus $3.95/b compared with the previous month, by far its lowest level relative to Dated Brent, according to Platts records which date back to January 2002.

URGENT PLEA

NOC said the continued attacks were damaging Libya's already stricken economy.

"NOC strongly condemns these acts of sabotage which have become frequent and which are deliberately targeting oil fields and oil installations," it said.

It said there was an urgent need for oil facilities to be protected by the 25,000 or so guards employed in Libya to defend oil sites against "tampering and vandalism."

The company's chairman Mustafa Sanalla in an interview with NPR said that Libya had currently lost around 80% of its production.

"We cannot produce [so] now we have two problems: low production and low price," Sanalla told NPR.

Libya is also divided politically.

It has an unofficial Islamist government now firmly entrenched in the capital Tripoli, while the officially elected administration of prime minister Abdullah al-Thani remains exiled in the eastern city of Tobruk.

Sanalla said he is in charge of NOC on behalf of the Tripoli government, and that the rival NOC based in Tobruk has "no staff, no people, no hardware, no software."

"We are still the NOC. The legal NOC is here. I am the chairman of NOC," he told NPR.

Libya has also seen a faction of the so-called Islamic State emerge in recent weeks, with Islamic State claiming at the weekend to have beheaded 21 Egyptians within Libya.

There was also speculation that the attack earlier this month on the 40,000 b/d Mabruk field was by Islamic State fighters.

Both the Egyptian and Libyan air forces have been targeting Islamic State positions in Libya since the video of the beheadings came to light.

--Paula VanLaningham, paula.vanlaningham@platts.com
--Stuart Elliott, stuart.elliott@platts.com
--Adal Mirza, adal.mirza@platts.com
--Sherif Elhelwa, newsdesk@platts.com
--Edited by Maurice Geller, maurice.geller@platts.com