Libya Crude Output Edges Higher After Clashes at Main Oil Ports

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Libya’s crude production made a partial recovery after clashes between rival armed groups led to a halt in shipments from two of the OPEC member’s biggest oil ports.

Output rose on Tuesday to 673,200 barrels a day from 663,000 the previous day, said Jadalla Alaokali, a board member of Libya’s National Oil Corp. The increase came from oil fields operated by Arabian Gulf Oil Co., an NOC unit known as Agoco, which had curtailed production in recent days due to security concerns, he said by phone. Output should rise further in coming weeks with oil from the Abu Attifel field operated by Mellitah Oil & Gas Co., he said.

The Benghazi Defense Brigades, a militia group, captured the ports of Es Sider and Ras Lanuf in an offensive that began on March 3. The ports had been under the control of eastern-based military commander Khalifa Haftar. The Brigades are ready to hand the ports over to the NOC, Mustafa Al-Sharkasi, the group’s leader, said in remarks broadcast Monday by local AlNabaa TV.

The clashes at Es Sider, Libya’s biggest oil port, and Ras Lanuf, its third-largest, jeopardize recent gains in Libya’s oil production. Exports had resumed from Es Sider and other facilities that were previously blockaded amid fighting in the country, which has Africa’s largest crude reserves. Production in February was almost double the level of the previous year, data compiled by Bloomberg show.

‘Big Uncertainty’

“There has been a big uncertainty over the oil ports, and that is extremely negative” for crude markets, said Riccardo Fabiani, a London-based senior analyst at consultants Eurasia Group. “The oil market will now assume that all the claims by the NOC to increase production to a million plus barrels per day are obviously impossible to implement,” he said. “It’s clearly not an option any more.”

Reports of Es Sider’s capture led benchmark Brent crude to jump by 82 cents a barrel on Friday, and prices jumped again when Es Sider and Ras Lanuf halted operations. Brent was at $56.05 a barrel, up 16 cents, at 12:18 p.m in London.

The Benghazi Defense Brigades are seeking to expel Haftar’s forces from other oil facilities in eastern Libya, including the city of Benghazi, the group’s leader Al-Sharkasi said in the TV broadcast. Ahmed al-Mesmari, a spokesman for Haftar’s so-called Libyan National Army, said the Brigades have instead fled Ras Lanuf and moved westward, in a statement on his Facebook page. The actual situation couldn’t be independently verified.

“The military situation in Es Sider and Ras Lanuf ports is calm,” the NOC’s Alaokali said, without elaborating.

Libya is struggling to revive oil production amid political turmoil and conflict among forces competing to control its energy assets. The country reopened two of its biggest fields in December but is still pumping far less than the 1.6 million barrels a day it produced before a 2011 uprising that ushered in years of instability.

The Organization of Petroleum Exporting Countries exempted Libya from its agreement in November to cut output to end a global oversupply.

Source: Bloomberg

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