London — Fighting between the self-styled Libyan National Army and UN-backed Government of National Accord in the capital Tripoli is threatening to reignite a civil war in Africa's third-largest oil producer.
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ICE Brent crude futures jumped to a five-month high of $70.86/b Monday on news that General Khalifa Haftar's LNA had advanced in to southern Tripoli, putting the country's oil infrastructure and production at risk, especially in the west of the country.
This escalation in violence comes after Libyan crude output recovered to over 1.06 million b/d in March, according to an S&P Global Platts survey, due to the startup of the Sharara field a month ago. That came after output had dropped to 870,000 b/d in February.
More clashes between LNA and various rivals groups and militias including forces loyal to the UN-backed GNA are expected in the coming days, with S&P Global Platts Analytics predicting around 350,000 b/d of supply being most immediately at risk if Haftar targets the Zawiya terminal and refinery and the Mellitah terminal.
"The outcome of Libya's latest setback will likely be determined by Haftar's moves in the coming days: in particular whether he can intimidate rivals into a political deal, backs off amid signs of stiff resistance, or decides to use force to achieve de facto control of the whole country," Paul Sheldon, geopolitical adviser at Platts Analytics, said.
* Libyan oil production and exports are unaffected but if violence escalates, this could spill over into the oil sector.
* International oil companies like Eni have already begun evacuating staff from Tripoli as the threat of escalation grows.
* Representatives of state-owned National Oil Corporation were unavailable to comment.
* Platts Analytics forecasts crude production to average 1.1 million b/d through end-2019, which is 100,000 b/d below sustainable capacity and highlights the downside risk.
* Output averaged 950,000 b/d in 2018, according to the Platts survey, its highest annual average since 2012.
* Libyan crude exports have averaged around 950,000 b/d since the 300,000 b/d Sharara field restarted in early March, according to Platts trade flow software cFlow.
* From December to early March, exports averaged around 755,000 b/d due to force majeure on Sharara along with bad weather closing its key oil terminals.
* Around 300,000 b/d of crude from Sharara, Libya's largest field, heads to Zawiya, for the export terminal and the refinery.
* Libya is exempt from the OPEC-led 1.2 million b/d output cut deal.
* Gas exports averaged 13.7 million cu/day since the start of 2019 to date.
* Libya exported some 4.25 Bcm of pipeline gas to Italy in 2018 -- or 6% of total supply.
* Gas production totaled 9.9 Bcm in 2017, according to the BP Statistical Review of World Energy 2018.
* Libya's proved gas reserves are 1.4 Tcm, or 124.0 years at current production, according to the BP Statistical Review of World Energy 2018
* Libya exports gas via the 29 million cu m/d Greenstream pipeline to Gela in Italy, but only 65% of the capacity is booked, according to data from the European Network of Transmission System Operators for Gas.
* Crude differentials for the Es Sider export grade have averaged a discount of $0.69/b to Dated Brent so far this year, according to Platts data.
* This compares with a discount of $1.45/b to Dated Brent that it averaged in 2018.
* Oil infrastructure in the West is a key risk, especially the towns of Zawiya and Sabratha.
* Zawiya is home to a 300,000 b/d export terminal and a 120,000 b/d refinery **The Mellitah gas and condensate terminal is located in Sabratha.
* Haftar took the western Sharara field in mid-February, and production there is now approaching full capacity of around 300,000 b/d.
* Almost all of Libya's key oil terminals and infrastructure, especially those in the east of the country, are already controlled by Haftar's LNA.
* The key oil ports of Libya are Zawiya, Mellitah, Bouri and Farwah in the west, along with Ras Lanuf and Es Sider in the east.
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