Libya oil output is said to drop to five-month low on field halt

CAIRO and DUBAI (Bloomberg) -- Libya’s oil production slumped to a five-month low as the North African supplier’s biggest field stopped pumping crude just weeks after re-opening from an earlier unplanned halt.

The OPEC member’s output dropped to 750,000 bpd from 985,000 after an armed group forced workers at the Sharara field to stop pumping, a person familiar with the matter said, asking not to be identified because they lack authorization to speak to the media. Sharara produced about 235,000 bpd before the halt.

National Oil Corp., the state producer, is negotiating with the group to re-start the field, according to two other people familiar with the situation. So far, the NOC doesn’t plan to declare force majeure at the field, one of them said. The halt at Sharara is yet another reminder of the challenges Libya faces in trying to restore and maintain oil output after years of internal conflict. The country, which holds Africa’s largest crude reserves, is currently producing at its lowest level since April, data compiled by Bloomberg show. Libya was pumping 1.05 MMbpd in August just before armed men closed a pipeline linking the field to a port and causing Sharara to halt pumping for more than two weeks.

Sporadic Disruptions

Sharara has endured sporadic shutdowns and disruptions this year due to protests, power blackouts and security issues. The giant field in western Libya, run by a joint venture between the NOC and Repsol, Total, OMV and Statoil, is crucial to the nation’s oil recovery. Output had reached a four-year high in July before a spate of shutdowns at various fields stalled the recovery.

The partial revival in Libyan production has coincided with efforts by OPEC and other producers to cut output to rein in a global glut. Iran and the UAE are among OPEC nations that express concern that rising production in Libya and Nigeria, the organization’s only members exempt from cutting, is complicating the group’s push to re-balance the oil market and prop up prices. OPEC agreed in November to let Libya and Nigeria pump at will due to their internal strife.

Libya pumped 1.6 MMbpd before a 2011 revolt led to the collapse of central authority and years of fighting among rival governments and militias vying to control its energy wealth. Libya isn’t planning to join any agreement to curb output until it reaches and maintains its target of pumping 1.25 MMbpd by December, two people familiar with the situation said in July.