Updated on June 9, 2020
Since this article was published, Libya’s Sharara field once again was shut due to an invasion by hostile forces. A good update can be found here (link to Reuters). Our market impact commentary below still holds, when production returns.
Production may gradually return this summer after a five-month halt.
On June 7, 2020 and June 8, 2020, the Libyan state-run National Oil Corp announced the decision to restore production at the country’s two largest oil fields, Sharara and El Feel.
With both fields producing at full capacity, up to 400 MBbl/d may return to the markets, according to Bloomberg. The country had produced about 1.1 MMBbl/d in 2019.
The National Oil Corp said that it will take 90 days to reach full operational capacity for the Sharara Field, gradually increasing production from 30 MBbl/d to 300 MBbl/d.
The El Reel field has a production capacity of 100 MBbl/d. In a statement on June 8, 2020, the Libyan National Oil Corp said, “The first production phase at El Feel field will start at a capacity of 12,000 barrels/day. Production at the field is expected to return to full capacity within 14 days due to the damages caused by the very long shutdown.”
The restoration in production comes after production was at a standstill for five months. Tribal leaders in eastern Libya controlled by commander Khalifa Haftar closed oil ports and fields in January, crippling the country’s oil and gas industry.
This announcement comes as OPEC+ members signed a deal extending curtailments through July on June 6, 2020.
Following the announcement, Saudi Oil Minister, Prince Abdulaziz said “Certainly they (Libya) are not a party to the reduction agreements. In due time, we will consider what to do with Libya, but as long as they are way behind what they are going to be producing, I think it will be unfair and unproductive.” Libya, the largest African producer in OPEC, had produced as much as 1.2 MMBbl/d in 2018.
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