Libyan oil output surges above one million bpd as force majeure ends
Libya’s oil production climbed back above a million barrels per day after a force majeure in place from the start of the year ended.
The North African country is currently pumping about 1.04 million bpd, but this may not be sustainable, the National Oil Corporation said.
“It is worth mentioning that the [NOC] faces very big financial difficulties and a huge shortage of its budgets, which led to [ the accumulation] of debts on the sector’s companies and significant delay for the salaries of its service companies,” the company said.
It also said that production may fall or cease due to political unrest in the country.
Blockades have resulted in lost Libyan oil production worth $ 6.5 billion this year and led to an increase in infrastructure reconstruction costs, according the NOC.
Much of Libya’s oil production was affected by the civil war that led to the overthrow of Muammar Qaddafi in 2011.
Production, which stood at about 1.75 million bpd before the conflict, fell by 850,000 bpd in the years that followed as protests and blockades prevented crude exports from leaving the country’s ports.
Libya produced 1.2 million bpd in 2018 and last year but its output dwindled to 106,000 bpd in August, according to Opec’s secondary sources.
The return of Libyan oil poses a challenge for Opec+ at a time when the group is reducing output to drain a supply glut and stabilise prices.
The alliance, led by Saudi Arabia and Russia, is currently drawing 7.7 million bpd from the markets.
The group reduced supply by 9.7 million bpd between May and July to counter a record fall in demand caused by movement restrictions to contain the Covid-19 pandemic.
West Texas Intermediate fell by 4.25 per cent to $37.14 a barrel on Friday, while Brent was down 3.62 per cent at $39.45 a barrel as markets factored in the prospect of Joe Biden becoming the next US President.
Opec+ has so far exempted Libya from participating in the production curbs deal. However, higher output from Libya is expected to raise concerns at the group’s next meeting.