London — An explosion at an oil pipeline running to the Es Sider terminal in Libya on Tuesday has sent oil prices to highs last seen in May 2015, as the incident is expected to cause crude production to decline between 70,000 b/d and 100,000 b/d.
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Oil futures were rallying on the news. At 1650 GMT, ICE February Brent was $1.57 higher at $66.82/b. That was the highest level for the prompt contract since May 2015.
The explosion occurred at the Al-Zouk oil line, which connects the fields in the Mouradah basin and Sider oil port, NOC said in a statement.
Waha Oil Co., which operates in the area, "has immediately diverted production to the Samah line. However, NOC expects a reduction in production of [between] 70,000 to 100,000 barrels a day," the statement said.
Waha was producing over 260,000 b/d before the incident. Libya's total crude production was estimated to average at 950,000 b/d in November, according to survey by S&P Global Platts.
Waha is a joint venture of NOC and US companies ConocoPhillips, Marathon Oil and Hess.
Early investigations revealed that the explosion occurred at the line 15 km away from Mouradah, NOC said.
The Waha fire brigade was dispatched to the scene to deal with the resulting fire, it said.
"The affected area was isolated from the nearest valve, while help is arriving from teams based in the Rakoba field," it said, adding that NOC continues to investigate the causes of the explosion and "is closely monitoring developments."
Earlier reports by local media said that a terrorist group had placed two bags of explosives under the line up to 25 km north of Mouradah.
Waha operates the Waha, Samah, Dahra and Gialo fields, along with Es Sider and the pipeline network that carries crude from fields operated by Wintershall and Total to the export terminal.
In November, the company outlined plans to boost production to 600,000 b/d.