Libya’s two key western oil fields — El Feel and Sharara — have been closed again shortly after reopening, showing the extent to which they remain hostage to armed groups as the country’s civil conflict continues to escalate.

State-owned National Oil Corporation said the 75,000 b/d El Feel field had been shut June 10 after an armed group occupied the field.

NOC also said the 300,000 b/d Sharara field was shut late June 9 after the field opened twice briefly in the space of four days.

A key pipeline valve connecting the Sharara and El Feel fields with the Zawiya terminal and refinery had reopened June 5, paving the way for a resumption of output. Both sites were shut for almost five months due to a blockade that has dragged Libyan output to its lowest in 9-1/2 years.

NOC declared force majeure on crude loadings out of Sharara on June 9 after the group entered the area.

The recent stop and start events underscore the fragility of the country’s much anticipated return to export markets.

The North African oil producer is in the midst of a civil conflict between the UN-backed Government of National Accord (GNA) and the self-styled Libyan National Army (LNA), which has almost completely decimated its oil output.

The GNA has recently gained ground against the LNA led by Khalifa Haftar, causing some tribal groups and militias to switch allegiances but the situation remains extremely fluid and volatile.

Gas impact
The gas market was also impacted this week when on June 10, an armed group stormed the Mellitah oil and gas complex, from where the country exports gas to Italy via the Greenstream pipeline.

Sources said operations at the complex were briefly halted and that the group had left the complex by the afternoon.

The group loyal to the GNA had entered the facility and were hoping to stop supplies to Italy after it signed a maritime agreement with Greece.

Turkey, is currently at loggerheads with regional neighbors such as Cyprus, Greece along with Israel and Egypt over gas drilling and gas projects in the East Mediterranean.

The LNA — backed by Russia, the UAE, Saudi Arabia and other countries — has been locked in a bitter conflict with the government supported primarily by Turkey and Qatar. Oil and now gas facilities have been caught in the middle of their dispute.

Much of the gas that feeds the Mellitah gas terminal — the starting point of the Greenstream pipeline — comes from Wafa and the Bahr Essalam field, Libya’s biggest offshore gas field.

Supplies of natural gas from Libya via the Green Stream pipeline to Italy have been mostly unaffected by the blockade of key oil infrastructure by the LNA.

More disruptions likely
S&P Global Platts Analytics said recent events showed Libya’s potential restart of up to 400,000 b/d from southwestern fields faced many risks, and sporadic disruptions were likely to persist.

“Eastern general Khalifa Haftar could regroup with greater backing from the UAE, Egypt, and Russia, while Libyan production dynamics over the past few years indicate regional militias will likely continue to at least sporadically disrupt the fields and connected pipelines,” said Paul Sheldon, chief geopolitical adviser at Platts Analytics.

Hamish Kinnear, a MENA analyst at Verisk Maplecroft said the struggle and rapidly changing situation at the fields reflected the wider fluidity of the civil war.

Libya’s potential return to export markets with up to 400,000 b/d of mainly Es Sider and Sharara grade crudes comes as its partners in OPEC and their allies agreed on extending production cuts to cuts through July, to help bolster the market as it emerges from the depths of the COVID-19 pandemic.

Libyan crude production was around 70,000-80,000 b/d, less than 10% of levels before January 18, when the LNA orchestrated an oil port blockade. Production was then at its lowest since September 2011, when civil war led to the downfall of Moammar Qadhafi.

Libya holds Africa’s largest proven oil reserves. However, chronic political turmoil has undermined its ability to restore output to pre-civil war levels.

Despite recent military gains by the GNA, the LNA still controls the eastern terminals of Es Sider, Ras Lanuf, Brega, Zueitina and Marsa el Hariga. That means some two-thirds of Libyan crude, or around 800,000 b/d, remains offline.

 

Source: Platts

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