Zawiya shut-down could cost oil industry dear

Libya is again considering the closure of the Zawiya port on its west coast, taking measures to ensure the adjacent refinery is not damaged.

The National looks at why this development is critical for the country’s oil industry.

What is the significance of the Zawiya refinery?

The Zawiya refinery is Libya’s largest, with a capacity of 120,000 barrels per day. The state-owned National Oil Corporation plans to double capacity at the plant to 250,000bpd. The refinery is critical for processing crude from El Sharara oilfield, the country’s largest, which has a production of about 300,000bpd. On Thursday, a missile almost hit the refining facility. An attack on the plant would have had a debilitating effect on the Libyan oil industry, which has struggled to attract international oil companies and financing for new projects because of the security situation. El Sharara, which restarted production in August, is also being considered for a shutdown amid fierce clashes between various Libyan factions.

What is the reason for the latest round of clashes? Field Marshal Khalifa Haftar, who leads the Libyan National Army, has since April been trying to take the capital, Tripoli, which is 40 kilometres east of Zawiya. The field marshal handed over four large oil terminals, including Ras Lanuf and Sidra, which had been under blockade last year.

How has the conflict harmed the Libyan oil industry? Production in Libya, which has some of the cheapest, largely sweet oil in North Africa, has been offline during the civil war that erupted between rival factions after the fall of Muammar Qaddafi in 2011. Production, which had remained at about 1.75 million bpd, then fell by 850,000bpd in the succeeding years as protests and blockades prevented export of crude via the country’s main port terminals. In an interview with The National last year, NOC chairman Mustafa Sanalla said the country needed $60 billion to develop the sector.