After worker's death Libya's largest oil field shut down by protest

(June 8) Sharara, the largest oil field in Libya shut down due to a worker's protest. The workers are protesting the death of a colleague according to a source who could not be identified as he she was not authorized to speak to the media.

The stoppage reduces Libya's output by about 270,000 barrels a day. The shut down is a setback for National Oil Corporation(NOC) head Mustafa Sanallah who had just claimed that Libyan oil production had just reached 808,000 barrels a day. He also said that the NOC expected that number to rise to more than one and a quarter million barrels per day by the end of 2017.

The recent output was at its highest since October 2014 when 850,000 barrels per day were pumped. The increases in Libyan production as well as Nigeria are causing problems for the Organization of Petroleum Exporting Countries(OPEC) that are trying to keep prices up and production down. Cuts were extended after a meeting on May 25 in Vienna.

In spite of the shutdown, oil prices dropped more than 5 percent after the US government reported an unexpected rise in inventories of both oil and gasoline. Yesterday, June 7 US crude futures fell to $45.72 a barrel the lowest sine May 4. The Shahara shutdown is expected to be only temporary and an NOC official said that force majeure is unlikely to be declared although Sanalla did not answer the phone or reply to text messages seeking information.

Crude had just begun flowing from Sharara in western Libya to the Zawiya refinery in late April this year after being closed for three weeks. Another field El Feel was also re-started in April. Before Gaddafi was overthrown in 2011 Libya pumped up to 1.6 million barrels per day. Libya has the largest oil reserves in Africa. Both Libya and Nigeria are exempt from the OPEC cuts. Libyan production in 2017 has improved significantly from 2016. The US is increasing output and Nigeria as well so the oil glut continues even with Libya's main oil field shut down. Increases in prices has resulted in US oil producers upping production and to some extent negating the OPEC cuts.

UPDATE (June9) Production resumed today: "Libya’s Sharara Oil Field resumed production on Friday after two days of closure due to protests".

TV address of Libyan PM-designate Faiez Serraj of the Government of National Accord

In a pre-recorded TV address, Faiez Serraj, PM-designate of the UN-brokered Government of National Accord (GNA), gave a mainly upbeat talk about the progress of the GNA in Tripoli.

Almost a month after his entry into Tripoli, Serraj noted that the entry was peaceful and without any bloodshed. He outlined the achievements and plans of the Presidential Council and the GNA. The GNA so far consists of some but not all members of the Presidential Council headquartered at the Bu Sitta Naval Base in Tripoli. The State Council, a mainly advisory body, composed of former members of the rival General National Congress (GNC), parliament has been formed and has occupied the former headquarters of the GNC. As yet the GNA has no legislature because there has been no formal vote on the GNA by the House of Representatives (HoR) based in Tobruk. The HoR does not recognize the GNA as yet. The Libya Herald reports Serraj as saying that the HoR should "complete its commitment as the only legitimate legislature in the country," referring to its failure to vote on the GNA. There have been numerous meetings of the HoR to vote on the GNA but all have been without a quorum or have been disrupted with no vote taking place.

There has been talk of the HoR convening in another location. This happened before but no meeting took place outside of Tobruk. This time some members are already gather at Ghadames according to a recent tweet: "‏@LibyaschannelEN #HoR members arriving in #Ghadames. MP Salah Zubik told us 2 days ago that #GNA vote is scheduled for next Wednesday."

Serraj claimed that the PC and Council were "working tirelessly to complete the commitments of the Libya Political Agreement and that the time for talk and argumentation was over." Given the actions of the HoR government under PM al-Thinni and commander-in-chief of the Libyan National Army, Khalifa Haftar, Serraj may be forced into more talks.

The eastern government tried to illegally export oil through the breakaway eastern branch of the National Oil Company(NOC). The Indian-flagged tanker Distya Ameya was unable to dock in Malta and appears now to be headed back to the GNA-controlled port of Zawiya in western Libya, according to Nagi al-Maghrabi, who chairs the eastern-based NOC. He said the situation was "a legal issue and we will work on it" and that he would continue to fight for the right of the eastern-based NOC to export oil. While the GNA is likely to be able to win on this issue, another conflict with the east and Haftar may be more difficult and the GNA may not win. As with many opponents of Haftar and commentators, Serraj cannot bring himself to use his name. It does not appear in his article.

Haftar has been moving towards Sirte to liberate it along with other units of the LNA from the south-east:Serraj said that they have called upon the GNA’s defence minister to put in place a plan and form a unified command that includes all forces from all over Libya to liberate Sirte from IS, scuppering separate plans by the various forces to act unilaterally.It is not clear that a mere announcement by the GNA will "scupper plans" of Haftar and his forces and the HoR government. The GNA may need force or the threat of force to bring Haftar on board. Alternatively, he may need to talk to him, even though the time for talk is supposed to be over.

The Libya Observer also remarks on Haftar's move toward's Sirte and says it is seen as political opportunism. The Observer describes the response of the GNA's PC to the issue:The Presidential Council (PC) of the UN-proposed government has called on all military forces to wait for the appointment of a joint leadership for the liberation of Sirte from IS, asking them all to unite under the command of the PC as being the Chief Commander of Army according to Skhirat agreement.Finally after months, the PC notices that it is the Commander in Chief of the Army according to the political agreement. Up until now they have not noticed that in fact Khalifa Haftar continues to play that role and he has not indicated he is about to go back into retirement.

Serraj says that he will not allow the battle for liberation of Sirte to be used for political leverage or personal gain. Of course, Serraj and the PC have decided that their own political leverage and their control of the military is more important than the liberation of Sirte, otherwise they would welcome Haftar's move and immediately seek cooperation and coordination.

Egypt signs oil deal with rival to independent Libyan National Oil Company

International oil companies so far have dealt only with the National Oil Company(NOC) based in Tripoli that has maintained a position of neutrality between the two regimes.

The internationally-recognized House of Representatives (HoR) has set up its own rival National Oil Corporation in the east in the hope of keeping all the oil revenues for itself no doubt. So far over the course of almost a year none of the larger international oil companies have been willing to deal with this HoR creation. However, now the eastern -based NOC has reportedly signed a deal to export 2 million barrels of oil to Egypt a month to the Egyptian General Petroleum Company.

The UN and the international community have called for respecting the neutrality of the two main sovereign bodies that give Libya whatever unity it still has, the NOC and the Central Bank of Libya(CBL). This move is particularly worrisome since with the advent of the new Government of National Accord(GNA) the UN and the international oil companies will expect that the NOC will come under the control of the new GNA. Egypt says it supports the GNA. This action directly challenges the GNA by signing a deal with a company under the control of a government that should dissolve and the HoR would become part of the new government. The move makes it appear that Egypt thinks that there might be an actual split of Libya into two separate areas. As a Libya Herald article puts it:The international community are fearful that an effective duplication of sovereign institutions would further weaken the Libyan state and make the current political split of Libya irreversible.

The NOC that is based in Tripoli has the right to take legal action against the eastern oil company and the party in Egypt that signed the deal, the Egyptian General Petroleum company. The NOC(Tripoli) said: “Any operations that are conducted outside the legal validity represented in the National Oil Corporation whose headquarters are located in Bashir Sadawai Street in Tripoli are considered an explicit breach of the law.” It is not clear how the NOC could enforce any decision against the eastern NOC at present. The Tripoli NOC is recognized by such large international traders as Glencore and the Vitol Group. They may have problems loading crude at eastern ports as the HoR wants tankers to register with their eastern NOC.

Oil production in Libya is down about 80 percent from 2011 when the Gadaffi government was toppled. In November Libya pumped about 375,000 barrels a day. The decline in oil prices is creating a budget crisis for both rival governments..

The Italian oil major Eni's CEO met with the chair of the Tripoli-based NOC and both said they were pleased with the recent LPA and the new Government of National Accord. Both felt the new GNA might help stabilize the country. Chair of the NOC Mustafa Sanalla said: "I am very pleased that the collaboration with such an important partner as Eni continues without interruption,"