Derek Brower, TRIPOLI: Libya’s oil production is recovering far more quickly than forecast and exports will surge within a couple of weeks, the head of National Oil Company (NOC) told Petroleum Economist in a 2 October interview. Pre-war output of 1.6 million barrels a day (b/d) will be reached within 14 months, he said, and 1 million b/d within five.
Oil production has already reached 350,000 barrels a day (b/d) and will jump in the next week as the Sharara oilfield in the country’s southwest comes back on stream, NOC chairman Nuri Berruien said in Tripoli.
Swiftly rising production will also boost sales to foreign markets. Berruien said exports would reach 400,000 b/d by mid-October.
The 120,000 b/d Zawiyah refinery, west of the capital, is also now operating again, he said, processing crude shipped from Tobruk, which is exporting supplies from the Sarir oilfield, southeast of Benghazi. The news confirms Petroleum Economist’s report from last week.
Oil from Sarir, which is operated by NOC unit Arabian Gulf Oil (Agoco), was being sent to Mellitah, in Libya’s west, and from there to Zawiyah to be used as feedstock for the refinery, which supplies Tripoli and the surounding areas.
Little damage to infrastructure
Berruien said more than 90% of Libya’s oilfields had now been secured, allowing production to resume. There has been little damage to oil infrastructure, sector officials told Petroleum Economist, and no damage to wells.
The 400,000 b/d Waha complex, in Libya’s central Sirte basin, would be on stream “in less than two months”, Berruien said. NOC’s partners in the field, US firms ConocoPhillips, Marathon Oil and Hess, could not be reached for comment.
Export facilities across Libya are also gearing up. “Ras Lanuf is getting ready,” Berruien said, referring to Libya’s key export refinery, in the centre of the country. The war affected some accommodation facilities, but Berruien said there was no damage to the plant.
The re-start of the Sharara oilfield, operated by the Akakus joint venture between NOC and Repsol, will feed Zawiyah refinery. Until then, the plant is processing Sarir oil.
Libya has already exported one shipment of oil from Tobruk – a 381,000 barrel cargo of Agoco’s Sarir crude given to trading firm Vitol, in payment for fuel shipments earlier in the war. ConocoPhillips reportedly bought it from Vitol for processing in Germany’s Miro refinery.
Recovery defies analysts' predictions
Agoco, which said its own output would rise to 350,000 b/d by mid-October, will ship another cargo from Tobruk in the coming days.
Although remnants of Muammar Qadhafi’s forces continue to resist efforts by revolutionary forces to capture Sirte and Bani Walid, delaying the appointment of a new interim government, analysts and rebel soldiers expect the war to be over within 10 days.
In the meantime, the oil industry’s recovery is defying predictions from many analysts outside Libya, and production has already exceeded most forecasts.
Rising Libyan exports should soften Brent crude prices and may affect sales by other members of Opec, whose supplies in September are expected to have averaged 30.25 million b/d – 100,000 b/d more than August and the highest since October 2008.
Opec’s secretary general, Abdalla El-Badri, said in mid-September that the group’s Gulf members, which have lifted production in recent months, would likely cut output as Libya’s output rose. Berruien, who also said Libya hoped to go beyond its pre-war output average of 1.6 million b/d, added that it was too soon to discuss the country’s Opec quota, which would limit such ambitions.
But a new era is dawning on the state company. NOC would behave differently with its foreign partners and continue to replace regime figures, said Berruien.
“We’re going to a new democracy, a new government to be declared,” he said. “A few departments have been changed. The structure will be stronger and [NOC] more independent. We’ll deal with international oil companies as real partners.”
In the past, he said, NOC wouldn’t respond to foreign investors for months. “Now there will be more transparency.”