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Libya's Agoco halts crude production in budget standoff with government

Highlights

Oil fields feeding into Sarir/Mesla crude grade impacted

Agoco has total production capacity of 250,000 b/d

Outage a setback for Libya's recent oil output rebound

London — Production in several of Libya's major eastern oil fields has been shut down, heightening the central government's budget crisis.

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A spokesman for state-owned National Oil Corp. subsidiary Arabian Gulf Oil Co. said April 19 that it had halted pumping at its fields due to the government's failure to send federal funds since September for operations.

Agoco, as the subsidiary is known, operates eight oil fields with a total capacity of 250,000 b/d, which feed into key Libyan crude grade Sarir/Mesla, which is exported from the 230,000 b/d Marsa el-Hariga terminal.

A source familiar with the matter said it was doubtful the company would completely shut in production at its fields, with some amount of crude and associated gas needed to maintain power generation.

The Agoco outage will set back Libya's dramatic rebound in production in recent months, following a ceasefire between long-warring factions and the formation of a fragile Government of National Unity, which was sworn in March 15.

OPEC member Libya, which had not formally disclosed its production to the organization since March 2015, self-reported crude output of 1.28 million b/d in March in the latest OPEC monthly oil market report, up 100,000 b/d from February. NOC has outlined ambitions to pump 1.45 million b/d by the end of the year.

NOC could not be reached for comment.

The Libyan parliament is scheduled to convene April 19 to approve the stalled budget, according to local reports. Without a formal budget in place, the government has been financing vital operations from an emergency fund.