Libya is about to re-open the last major oil terminal that has been shut due to factions fighting in a move that would allow it to further increase oil exports, potentially putting pressure on oil prices and on fellow OPEC members that have just started cutting output in a bid to stabilize prices and speed up the drawdown of the inventory glut.
Libya’s Zawiya export terminal is getting ready to restart its exports after the pipeline carrying crude to it was re-opened, Bloomberg reports, quoting an official at the National Oil Corporation (NOC).
The imminent re-opening of the Zawiya export terminal means that all nine major oil ports in the country will be shipping oil.
At the end of December, the NOC said that the pipelines connecting the Sharara oil field to Zawiya refinery, and the El-Feel (Elephant) oil field to the Mellitah complex, had been re-opened. The Sharara field – operated by a joint venture between NOC and a consortium of Repsol, Total, OMV and Statoil – has a production capacity of about 330,000 bpd, while El-Feel field is operated by a joint venture between Italy’s Eni and NOC with a production capacity of around 90,000 bpd.
Earlier this week, NOC said that Libya’s total crude oil output had hit 685,000 bpd as of the start of January, thanks to the resumption of pipeline operation from the Sharara and Elephant fields.
The NOC has said that production at Sharara will return to its daily capacity of 330,000 bpd gradually, but did not specify any similar details about Elephant. Still, the NOC added that it hoped output can be raised to 900,000 bpd in the next few months. By the end of 2017, the NOC has plans to bring daily production to 1.1 million bpd.
Increased output from Libya – which was one of two producers exempt from OPEC’s cuts together with Nigeria – may further complicate the cartel’s otherwise complex task to stick to promises, without cheating, to curtail crude production to 32.5 million bpd.