Libyan crude output is expected to drop to a 14-month low this week due to a blockade at its western oil fields, as well as pipeline repairs at its eastern Waha fields.
The development comes as Libya’s political stability is in jeopardy. Elections have not yet been planned after they were cancelled on December 24.
According to reports, the North African producer is currently pumping around 700,000 barrels per day, a drop of around 500,000 barrels per day since mid-December.
The state-owned National Oil Corporation announced on January 3 that the pipeline connecting the Samah and Dahra fields to the Es Sider terminal would be shut down for repairs, resulting in a 200,000 b/d drop in production.
There have been numerous leaks in the last year in the 32-inch pipeline that transports crude from the Samah and Dahra oil fields to the Es Sider port because the pipe is brittle.
Libya’s key oil fields in the southwest, Sharara, El Feel, Wafa, and Hamada, as well as Zawiya’s 300,000 b/d oil terminal, have been closed since December 20 due to a blockade by Petroleum Facilities Guards.
NOC said at the time that the blockade would result in a loss of more than 300,000 b/d, prompting it to declare force majeure on operations at these facilities.
Due to a dispute with NOC, an armed group affiliated with PFG has closed the four oil fields and the pipeline that connects Sharara to the Zawiya oil terminal.
Since the 2011 civil war, the country’s oil industry has been threatened by groups vying for control of valuable assets, including armed attacks on key pipelines and production facilities.
OPEC member country Libya’s election failed on December 24 due to difficulties with candidate registration, hindering international efforts to end decades of political and regional conflict in the country.
According to the electoral commission, the first round of the long-awaited presidential election will now be held on January 24. Despite this, many analysts believe that elections won’t be held this month because the delay has weakened the credibility of the UN-backed Government of National Unity and its Prime Minister, Abdul Hamid Dbeibah.
S&P Global Platts Analytics had identified an election-related flare-up as a top oil market risk for 2022.
“We forecast [Libyan oil output of] 1.1 million b/d in 2022, 100,000 b/d below capacity, but supply risks point squarely to the downside,” it said in a recent note.
Libya’s last election was held in 2014 and led to two rival governments, after which crude production was below 500,000 b/d for nearly two years.
