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Libya's Sharara restarts after brief force majeure

The fate of the Sharara field has become entwined with a campaign for better basic services for the inhabitants of southern Libya

Libya’s biggest oil field, Sharara, was briefly shut down by an unidentified group in July, raising the spectre of a return to the frequent protests that saw the field taken offline at intervals over the past four years.

The group shut the 290,000 bl/d field on 19 July by closing a valve at Hamada, on the pipeline connecting it with the port of Zawiya.

The National Oil Corporation (NOC) briefly declared force majeure for Sharara shipments; but after three days of negotiations the group, which the NOC has not named, agreed to withdraw and the pipeline was reactivated.

The stoppage put a brief a dent in Libya's production, which NOC chairman Mustafa Sanallah says stands at 1.2-1.3mn bl/d.

Sharara's problems are political. Operated by an NOC partnership with Repsol, Total, OMV and Equinor, it is hostage to the problems of Libya's economically disadvantaged south. Protestors have shut the field in recent years demanding better jobs, healthcare, petrol and electricity.

Sanallah has campaigned to improve living conditions in the south, which would take the sting out of the protests. He recently announced plans for a pipeline to connect the currently dormant Atshan gas field to a new power plant at Ubari, offering the promise of regular power supply to the south. He has also arranged convoys of gasoline from coastal refineries to ease fuel shortages in the region.

Libya, holder of Africa's largest oil reserves, produced 1.6mn bl/d until the 2011 revolution. Post-revolutionary chaos saw it fall to 220,000bl/d in the summer of 2016, with several of the country's ubiquitous militias shutting fields and ports. Since 2016, the NOC has reopened most fields, and production is thus far unaffected by the ongoing battle for Tripoli, the worst fighting in the country since 2011.

Sanallah said in a press statement that the NOC is constrained by a lack of funding, which comes via the UN-backed Government of National Accord in Tripoli.

"NOC could add up to 400,000 barrels to [daily] production through critical infrastructure upgrades, advancing outstanding deals, and attracting new investment," he says. "To do this we need sufficient budget and to not operate against a backdrop of ongoing conflict."

Despite all fields being operational, Libya's oil income for the first six months of 2019 was 11pc down on the corresponding period in 2018, at $10.3bn.

Source: Petroleum Economist
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