Libya's largest oil field resumes production
Libya has taken a new step in reopening its battered economy and oil industry with the resumption of production this Monday from the Al-Sharara oil field, the country's largest, according to a statement from the National Petroleum Corporation.
"The National Oil Corporation announces that it has reached an agreement according to which the Oil Facilities Guard is obliged to end all obstacles facing the Al-Sharara field and ensure that there are no security violations," the text reads.
The oil field reported Libya's oil production at 350,000 barrels per day with the opening of Al-Sharara. On Thursday, the Central Bank of Libya said the country's losses due to the closure of the oil facilities amounted to $10 billion.
On September 18, the Libyan National Army (LNA), led by Marshal Khalifa Haftar and dominating the east of the country, said it had reached an agreement to resume oil production with the GNA, which dominates the west of the country. This agreement was negotiated by Deputy Prime Minister Ahmed Maiteeq, who represents the city of Misrata.
Ten months ago, the Libyan oil field stopped its exports amidst political clashes in the country. Now, the field will initially pump 40,000 barrels of crude oil per day, before reaching its capacity of nearly 300,000 barrels next week, said one person with knowledge of the situation.
That would double Libya's total production to about 600,000 barrels a day, according to Bloomberg news agency, citing a source near the oil field. The same agency says Sharara's oil has begun to reach storage tanks in the port of Zawiya.
Libya is a member of OPEC and has the largest oil reserves in Africa. But it is exempt from the group's supply cuts, which began in May when the coronavirus pandemic stifled the economies and caused oil prices to plummet. The alliance, led by Saudi Arabia and Russia, planned to ease restrictions by two million barrels per day from the beginning of 2021.
Oil prices remained stable during Monday's opening session as markets prepared for the return of Libyan oil.
Brent, the international benchmark oil index, fell by 3.08% to $41.53 per barrel at 8.55pm UAE time. West Texas Intermediate, the key indicator for US crude oil, fell by 3.33% to $39.25 a barrel.
Goldman Sachs investment bank expects production to recover to 550,000 barrels per day by the end of the year. Analysts at Bloomberg Intelligence see production reaching one million barrels per day in the fourth quarter, putting further pressure on oil prices already hit by the coronavirus pandemic. Despite this, experts point out that previous agreements to reopen the oil industry have failed.
But recovery from the historic fall caused by the virus pandemic is faltering, and both the OPEC and its allies and Russia are relaxing the self-imposed limits on production. Libya is exempt from these OPEC limits because of its struggles. However, the amount of extra oil the country can export will depend on how quickly it can fix the wellheads, pipelines and storage tanks that have been neglected or damaged during the conflict.