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".

Two western Libyan oil terminals under force majeure after pipeline shutdowns

(March 30) Two oil terminals in western Libya Zawiya and Mellitah are under force majeure after a pipeline shutdown prevents them from fulfilling their contracts.

The pipeline from Libya's biggest oil field Sharara has been shut down. A group of militia guarding the field shut down the pipeline due to a delay in the payment of their wages Libyan officials said. The pipeline had been just opened last December after having been closed for two years. Together with production from eastern fields Libya's production was said to reach 700,000 barrels a day but the shutdown of the pipeline and another one to the smaller Wafa field will lessen production by about 250,000 barrels a day. However officials expected that the dispute would be resolved shortly. Repso SA of Spain and ENI SpA of Italy who both have stakes in the two fields did not reply to requests for comment.

The increase in Libya's exports ceased briefly for the short while that two ports, Es Sider and Ras Lanuf were captured from the forces of eastern commander Khalifa Haftar. However, he has recaptured them and already one tanker has been loading oil at Es Sider.

The tanker Sea Vine was to arrive at Zawiya on Wednesday to load 600,000 barrels of crude but the booking has been canceled according to a source who did not want to be identified. However, Bloomberg tanker tracking still shows that the Sea Vine is headed for Zawiyah. Libya's output per day is now around 500,000 the lowest since last September. There has been no official comment by the NOC according to Reuters. Before the uprising against Gaddafi in 2011 output was about 1.6 million barrels per day. The NOC had been hoping to quickly increase production.

The NOC has criticized attempts to sell oil illegally and not through the NOC as is required by law. The Presidency Council of the UN-brokered Government of National Accord recently decided to take upon itself the power of the oil ministry and also deprive the NOC of some of its powers. This did not sit well with the NOC: "The National Oil Corporation (NOC) has come out fighting in a battle with the Presidency Council which yesterday stripped the oil ministry of key powers and assumed many of them itself, while also diminishing NOC’s role." Mustafa Sanalla, chair of the NOC said: “I have asked the Presidency Council to withdraw its recent resolution. It has exceeded its authority. Only the House of Representatives, the legislature, has the power to make these changes”. So as well as a work stoppage threatening NOC production and export, there is also an internal split that could create even more problems.

Production to re-start from two oil fields in western Libya

Protesters who have been blocking pipelines from Sharara and El Feel oil fields have agreed to reopen them. Oil industry and security officials claim that production could start again within days.

Before the uprising against Gadaffi in 2011, Libya was producing up to 1.6 million barrels per day. While production has doubled since September when eastern oil crescent ports began to export again, it is still just around 600,000 barrels a day. Opening the new fields could boost production by another 365,000 barrels a day.

A faction of the Libyan Petroleum Facilities Guard (PFG) has blockaded one pipeline since November of 2014 and another from April of 2015. A tweet claims an even longer blockade: "The blockade of El Feel was on 31-May-2013, Elshara on 25-June-2013 Both by Zintanis. Jadran blocked terminals after July-2013". Jadhran blocked ports in the east. The group said it had agreed to unblock both: "The National Oil Corporation should start its work as soon as possible and we, as the Petroleum Facilities Guard, pledge to protect and defend the wealth of the Libyan state." The western section of the PFG is not headed by Ibrahim Jodhran who was head of the eastern PFG until the oil crescent ports were seized from him by troops loyal to eastern commander Field Marshal Khalfa Haftar. Indeed, the western faction are allied with the Libyan National Army (LNA) commanded by Haftar. The area is secured by the Zintan brigades. Idris Madi, who heads the LNA commander center at Zintan said the blockade should be ended by Thursday.

As mentioned, the PFG faction is aligned with the self-styled Libyan National Army (LNA), a force based in eastern Libya. Its statement was confirmed by the office of Idris Madi, head of the LNA's command center in its western outpost of Zintan. Madi's office said the blockade would end by Thursday. The National Oil Company(NOC) based in Tripoli also confirmed that a deal had been made. However, it noted that similar deals in the past had fallen through. No details were released of the agreement.

A refinery at Zawiya and a complex at Mellitah were readying for a restart. They receive oil from the two fields. A spokesperson for the NOC said that both places had been preparing to restart production and that work to resume delivery of oil was also taking place in the fields. Production would only gradually increase. However, the NOC said that it hoped to reach a goal of 900,000 barrels a day soon and 1.1 million barrels next year. However the NOC needs new funds for its operating budget as well as ending of blockades before it could reach its goal.

The Libya Observer reports that the Rayayna Patrols Brigade of the PFG had reopened the Rayayna oil pipeline on Wednesday after they were instructed to do so by the western operations room of Khalifa Haftar's LNA. The pipeline feeds oil from the Al-Sharara and Al-Feel fields into the two main western oil terminals. The Observer speaks of the brigades as Zintani armed groups. Mustafa Sanallah had filed a lawsuit last October against the militia. He claimed that closure had lost Libya over 27 billion dollars in revenue. Khalid Shakshak said last November that reopening of the Rayayna pipeline to resume pumping oil through it would solve 70 percent of Libya's economic crisis.

However, there is as yet no sign of any solution to the political crisis with the eastern government of the House of Representatives (HoR) and its armed forces commander Khalifa Haftar having control of most of Libya's oil resources. There is no information as to how oil revenue is being divided. However, the UN-backed Government of National Accord (GNA) complains that it is not receiving sufficient funds from the Central Bank in a timely fashion to pay for essential services.

UPDATE: There is already a problem with the El Feel field, with guards their rejecting the agreement apparently.