Libya is getting better at resolving stoppages in its oil industry, underpinning a growing perception that the Organization of Petroleum Exporting Countries (OPEC) member is closer to becoming a stable producer again. This is because of the duration of incidents.
While in prior years protests could shutter fields for months and years, now the stoppages are being resolved within days and barely hindering flows. Sharara, Libya’s biggest field, had several short disruptions this year, including two this month, after being closed for more than two years. Mustafa Sanalla, chairman of state-run National Oil Corp., was quick to visit Sharara to resolve the latest dispute, offering to revise security measures.
Libya is reviving its oil production and exports in spite of continuing political uncertainty. In July, crude production was at a four-year high and exports were the most in three years, according to data compiled by Bloomberg. While the expansion has helped Libya’s oil-dependent economy, the OPEC is trying to cut global supplies. That effort has been undermined by recovering output at OPEC members Libya and Nigeria.
The country pumped 1.6 million barrels a day before a 2011 revolt set off years of fighting between rival governments and militias. Workers at the Zueitina export terminal said recently they would not load tankers until their demands were met, including getting 20 months of back pay, union head Merhi Abridan said recently. The port reopened this week when workers were told their demands will be met, he said.
Under Sanalla’s tenure which started in May 2014, Libya has signed contracts with international companies, ended a blockade of ports, restarted exports and reopened fields, including Sharara in December following two years of closure. Oil production was at 250,000 barrels a day when he took over. In July, output was 1.02 million barrels a day, according to data compiled by Bloomberg.
Libya’s output will be about 1.2 million barrels a day by the end of the year “if everything goes well,” said Derek Brower, managing director of research at Petroleum Policy Intelligence, a U.K.-based consulting company.