Production At Libya’s Largest Oil Field Risks Shutdown, Again

Just as Libya’s oil production recovered to a two-month high of over 1 million bpd, fresh protests at the oil terminal and refinery servicing the country’s largest oil field, Sharara, threaten to shut down production again, just days after output had been nearly restored to the levels before the kidnapping of oil workers last month.

Sharara, which has the capacity to pump 340,000 bpd, has seen production recovering to around 300,000 bpd this week, ramping up from around 218,000 bpd last week. But renewed protests by workers who threaten to block a tanker from loading crude at the Zawiya oil export terminal, and protests that have now led to stoppage of the 120,000-bpd Zawiya refinery, may lead to the major Libyan oil field shutting down completely, Platts reported on Friday, citing a source at the Sharara field.

“We are expecting a complete shutdown [at Sharara] because of some problems at Zawiya refinery. Tomorrow a tanker is due but maybe loading will be stopped by the guys causing the problems,” the source told Platts.

Over the past week, thanks to the ramp-up of the Sharara oil production, Libya’s crude oil production has exceeded 1 million bpd for the first time since June, when port blockades and a kidnapping caused production outages that within a month brought production to as little as 670,000 bpd.

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The port blockades in Libya’s Oil Crescent that began in mid-June ended with an agreement some three weeks later, and the country reopened its oil ports in the east. Only a few days, later, the National Oil Corporation (NOC) declared force majeure on crude oil loadings at the Zawiya port in the west, following an attack and abduction of oil workers at the Sharara field that had cut production at the site.

Field production was limited to 125,000 bpd – enough to meet the requirements of the Zawiya refinery, but leaving no excess crude for export, the NOC said back then, noting that oil wells had been closed as a precaution.

The station at the Sharara oil field closed after the kidnapping was reopened this past weekend amid tightened security, an engineer at the field told Reuters this week.

By Tsvetana Paraskova for Oilprice.com

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