Oilfields in Eastern Libya to be Closed, Production and Exports Halted
The eastern-based administration of Libya has announced that it will close the oilfields in the eastern region, which account for almost all of the country’s oil production. This decision comes after a recent flare-up in tension over the leadership of the central bank. While there has been no confirmation from the internationally recognized government in Tripoli or the National Oil Corp. (NOC), a subsidiary of NOC, Waha Oil Company, has stated its plans to gradually reduce output and warned of a complete halt to Libya’s production due to unspecified “protests and pressures.” Another subsidiary, Sirte Oil Company, has also announced a cut in output and called on authorities to intervene to maintain production levels.
The majority of Libya’s oilfields are located in the east, which is under the control of Khalifa Haftar, the leader of the Libyan National Army (LNA). If production in the eastern region is halted, El Feel in southwestern Libya would be the only functioning oilfield, with a capacity of 130,000 barrels per day (bpd). According to the Organization of the Petroleum Exporting Countries (OPEC), Libya’s overall oil production was approximately 1.18 million bpd in July.
The Benghazi government has not specified how long the oilfields could be closed. On the other hand, Prime Minister Abdulhamid Al-Dbeibah of the Tripoli-based Government of National Unity has stated that oilfields should not be allowed to be shut down “under flimsy pretexts.” Engineers at Messla and Abu Attifel, two oilfields in the east, have also confirmed that production is continuing and there have been no orders to halt output.
The closure of the oilfields and the halt in production and exports are the latest developments in the power struggle that has plagued Libya for years. The country has experienced little stability since the NATO-backed uprising in 2011, which led to its split into eastern and western factions in 2014. These factions eventually drew in support from Russia and Turkey, further escalating tensions.
The recent escalation in tension is a result of efforts by political factions to oust the head of the Central Bank of Libya (CBL), Sadiq Al-Kabir. Rival armed factions have mobilized on each side, leading to increased instability. The Tripoli-based CBL announced the suspension of its services at home and abroad “due to exceptional disturbance.” The central bank is the only internationally recognized depository for Libyan oil revenue, which is crucial for the country’s economy.
The NOC had previously declared force majeure at the Sharara oilfield, one of the country’s largest, due to protests. Force majeure is still in effect at Sharara, which has a capacity of 300,000 bpd. Waha Oil Company, a joint venture with TotalEnergies and ConocoPhillips, operates five main fields in the southeast, including Waha, Gallo, Al-Fargh, Al-Samah, and Al-Dhahra. Waha has a production capacity of about 300,000 bpd, which is exported through the eastern port of Es Sider.
The closure of the oilfields and the halt in production will have significant implications for Libya’s economy and the global oil market. TotalEnergies and ConocoPhillips, the partners of Waha Oil Company, have not yet responded to the announcement.
In conclusion, the closure of the oilfields in eastern Libya and the halt in production and exports have been announced by the eastern-based administration. This decision comes amid a power struggle and tensions over the leadership of the central bank. The closure will have significant consequences for Libya’s economy and the global oil market, and it remains to be seen how long the oilfields will remain closed.