Econostrum | Economic News in the Mediterranean

Libya's crude oil production is trying to get back on track

Written by Frédéric Dubessy on Tuesday, January 11th 2022 à 18:10 | Read 301 times

The repair of a key pipeline is boosting oil production in Libya (photo: NOC)
The repair of a key pipeline is boosting oil production in Libya (photo: NOC)
LIBYA. According to the Libyan Ministry of Oil and Gas, crude oil production in the country has increased from 700,000 to 900,000 barrels per day. This announcement made on Monday 10 January 2022 is explained by the end of maintenance work, due to operational failures, carried out on a pipeline linking the Samah and Dhurha oil fields to the Es Sider export terminal, the most important in the country.

Completed earlier than expected (2 days instead of a week) on Wednesday 5 January 2022 by Waha Oil Company's technical teams, the work had led to a drop in production estimated at around one million barrels. A crucial activity for Libya since oil revenues represented 103.4 billion Libyan dinars ($22.39 billion - €19.90 billion) in 2021, i.e. 97% of Libya's income.

At the same time, this sector has also had to face the forced closure since the end of December 2021 of several fields in the west, including Al-Sharara, the largest in the country, as well as three others (al-Feel, al-Wafa and al-Hamada) representing more than 300,000 barrels per day, according to the NOC, the national oil company.

Closure of gas pipelines

The transitional government is still up against the Petroleum Facilities Guard (PFG), a paramilitary force protecting the hydrocarbon installations in this part of Libya, which is giving resonance to its demands (notably salary arrears) by practising blockades.

The NOC has also declared a state of force majeure that allows it to be exonerated from its responsibility in case of non-compliance with delivery contracts. Its president, Mustafa Sanalla, regretted that "these actions are causing suffering to citizens and we will not allow them to become a means of politicising Libyan resources for sectarian purposes or to serve individual interests.

The closure of the pipeline feeding the Mellitah gas complex from al-Wafa poses a problem for its managers, the NOC and Italy's Eni, to deliver gas to Italy. Similarly, the Al-Sharara pipeline, operated by a joint venture between the NOC, Spain's Repsol, France's TotalEnergies, Austria's OMV and Norway's Statoil, is reducing the electricity supply possibilities of the General Electricity Company, which foresees "a deficit of around 2,500 megawatts" with the direct consequence of "extending the hours of power cuts".

The two production limitations combined have caused a drop in production from 1.3 million to 800,000 barrels per day, the lowest level in over a year. In 2011, before the first civil war, it reached 1.6 million.

Libya now has four refineries on its soil. The one in Zawiyah (120,000 b/d capacity), near Tripoli, two others in the east of the country, Tobruk (20,000 b/d) and Sarir (10,000 b/d) and the largest one in Ras Lanouf (Gulf of Sirte) with a capacity of 200,000 b/d. In April 2011, the Libyan Minister of Economy and Trade and his Oil and Gas counterpart announced that they were studying several projects to build refineries in different regions of the country. They planned to finance them through local and international investments in the form of Public Private Partnerships (PPP).

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