Cairo – Libya has recaptured its momentum in the oil market after its oil and gas production has exceeded one million barrels per day. OPEC’s member states are worried that Libyan gains could undermine the organization’s efforts in reducing the global oil supply.
Mustafa Sanalla, the chairman of the Libyan National Oil Corporation, has doubted Libya’s capacity to produce one million oil barrels per day by August. However, others see this massive production can be easily maintained in line with the ongoing developments in the country. The total production of crude oil and gas in Libya exceeded 800,000 barrels of crude oil and 250,000 barrels of gas per day.
Libyan businessman Husni Bey told Asharq Al-Awsat that the production of crude oil –without gas- in Libya can exceed one million barrels within three months in case the National Oil Corporation provides the needed budgets. He added that the total production’s revenues and sales show that production of both oil and gas has already exceeded the million barrels.
El Sharara and the Elephant fields, which resumed their activity after suspension, contribute in increasing Libya’s production of crude oil to over 800,000 barrels per day, which is the highest record since 2014. Production during this week augmented by 30,000 barrels compared to the last one.
Both fields, with a capacity production of over 360,000 barrels daily, resumed their work in the end of April after being suspended due to protests. Al-Baida field in eastern Libya also resumed work after a four-year suspension.
Currently, it pumps 10,000 barrels per day, said a spokesman to the Arabian Gulf Oil Company (AGOCO). Omran al-Zwai, AGOCO’s spokesman said that before the suspension caused by the bad security conditions, the embargo imposed over the imports, and the damaged infrastructure, Al-Baida field’s production reached 14,000 barrels per day. He added that 60,000 barrels produced and currently preserved in Al-Baida field are expected to be exported. Zwai said that AGOCO exports oil through the ports of Al Hariga and Zuwetina.
OPEC and non-member producers have pledged to reduce the production by around 1.8 barrels per day, to curb the global offer. However, Libya and Nigeria were exempted from the organization’s reduction agreement.
For his part, Kamel Abdullah, expert in the Libyan issue from Al-Ahram Centre for Political and Strategic Studies doubted Libya’s capacity in increasing the production and maintaining the current levels amid the state of discord and chaos that dominates the country. He asserted that the production will not increase and will not reach one million barrels.
Abdullah told Asharq Al-Awsat: “The National Oil Corporation, Khalifa Haftar – the Libyan national army leader (LNA) – the Libyan presidency, and the different entities in the country do not have a real influence over the militants who are controlling the crude oil transportation lines. He expected the work oil fields to stop again amid the chaos and the political deadlock. The expert suggested that this fact was acknowledged by OPEC from the beginning, therefore, the organization exempted Libya from the agreement.
Oil comes in line with a partial improvement in the Libyan economy, following the deal inked with the French Bank Societe General who paid the Libyan administration over $1.1 billion aiming to avoid an expensive judicial procedure over a long conflict the bank faced with the Libyan Investment Authority.
The second biggest bank in France reached Thursday a settlement concerning allegations launched by the Libyan Investment Authority to accuse Societe General of corruption and deceitful acts.
Last summer, however, the Libyan Fund lost a lawsuit against The Goldman Sachs Group. The fund sought to bag of $1.2 billion from the American Company regarding nine investments proceeded in 2008.
On another hand, Libya prepares for the return of Russian companies soon, following statements by the Russian Deputy Minister of Foreign Affairs Mikhail Bogdanov during a meeting with Fayez Mustafa al-Sarraj, chairman of the Presidential Council of Libya and prime minister of the Government of National Accord in Tripoli on April 25.
If Libya insisted on increasing its oil production or maintained it, it will contribute in the pressures over oil prices. The list of factors triggering this pressure includes: slow demand, increased production of Shale oil, and increased offer.
These growing pressures will destabilize the client’s trust in OPEC’s capacity in re-securing the market’s stability. In this case, OPEC may reconsider its decision on exempting Libya from the agreement.