Libyan oil production exceeded 800,000 barrels per day (bpd) for the first time since 2014, the state oil firm said, but fighting between the government and militias as well as a commercial dispute with one of its foreign partners is holding back Libya’s full oil production potential.
NOC said Libyan oil production averaged 564,000 bpd in April, down from 641,000 bpd in March, 688,000 bpd in February, and 678,000 bpd in January.
“There are no technical reasons for the loss of production,” Mustafa Sanalla chairman of National Oil Corporation of Libya said in a statement. “We are able produce an average of 1.1 million-1.2 million bpd over the rest of this year, but for this to happen our oil must flow freely. A national effort is required.”
Sanalla said the country lost a significant amount of production in April from the Sharara and El-Feel fields, which were blockaded by units of the Petroleum Facilities Guards, one of the several militias operating across Libya, which still doesn’t have a single government with control over the whole country since the start of the unrest that culminating in the ousting of Muammer Gaddafi.
Earlier this year, an NOC board member said the country aims to reach a production of 1.2 million bpd by August. Although the country’s production has recovered, it remains below the 1.6 million bpd it produced before its 2011 uprising.
Libya ports and oilfields have faced closures from armed fighting between rival political factions and have also required repairs. The temporary hiatus have recently kept Libya’s production below anticipated levels.
The NOC also said a disagreement with Germany’s Wintershall over the share of the operator’s production owed to the Libyan state — and resulting debts, has shut in more than 160,000 bpd.
The NOC is attempting to swap concession agreement it has with Wintershall to a production-sharing contract, reducing the German company’s share of production by more than half, according to a statement quoted by Financial Times.
Wintershall said the company was forced to shut down its production as it was not permitted to load crude for export from the Zueitina Terminal.
“It would not be an economic exploitation of the petroleum resources… to continue production without generating revenues but still being obliged to carry all production-related operational expenses,” a Wintershall spokesperson told FT.
NOC said Wintershall had not been assigned an export allocation since March because of the dispute.
Wintershall’s spokesperson added: “There is no claim over money allegedly owed by Wintershall. Wintershall has always met its obligations towards the Libyan state.”
Speaking last week in Houston at a major oil and gas event Offshore Technology Conference, Sanalla said Libya’s full potential remains largely unrealised.
“We possess extensive acreage with discovered deposits in the Ghadames and Murzuq Basins, which are not covered by agreements with oil companies and are still awaiting proper assessment,” he told delegates.
“Our specialised teams are already reviewing the exploration and production sharing agreement terms, including contracting strategies to encourage investment in Libya by IOCs. We are preparing for our next bid rounds to be organised as soon as the country’s political stability permits,” he added.
Sanalla outlined development phases to increase Libyan oil output.
The first phase would raise production to 1.32 million bpd by the end of 2017, at a cost of $550 million, he said, while the second would raise production gradually to 1.5 million bpd by the end of 2018, at a further cost of $1.8 billion.
The investment would be mainly directed at the Bahr Essalam offshore development with Italy’s Eni, with approximately a further $1.2 billion invested in tank and pipeline replacement and maintenance.
The third phase would raise production gradually to 2.2 million bpd by 2023, requiring an investment of approximately $18 billion.