The Oil Story That Can Re-Write the Fortunes of Libya 2

Crude oil production rising

Libya has not had it easy either politically or economically since the political upheaval in 2011. However, there could be a well-known silver lining coming for the country amongst the instability that persists today — a potential increase in oil prices.

According to Organization of the Petroleum Exporting Countries (OPEC) data, petroleum exports form nearly half of the country’s total exports. Thus, a rise in crude prices would bolster the country’s economic growth substantially.

At the same time, crude oil production in Libya has been rising. Chairman of the state-run National Oil Corporation (NOC), Mustafa Sanalla, revealed that crude oil production exceeded 800,000 barrels per day in May – a first since 2014.

Crude oil production in Libya has been rising at a rapid pace. Only a few days prior, the NOC had said that oil production had just touched the 760,000 barrels a day mark.

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Output by operating company in the country is provided in the graph below made available by the NOC.

Reasons for the surge

Hitting 800,000 barrels per day was a major target for the country for this year, which it has already achieved. This has been made possible due to reopening of crucial oil fields – Sharara and El-Feel.

The Sharara field is operated by a joint venture between the NOC and Repsol SA, Total SA, OMV AG and Statoil ASA. It can produce 330,000 barrels per day.

Meanwhile, El Feel, also known as the Elephant, can produce 90,000 barrels per day, and is run by Eni SpA and NOC.

Both fields resumed production towards the end of April. El Feel is dependent on the Sharara field as the latter provides electricity to El Feel. Thus, it was able to restart production only after Sharara started pumping oil.

Meanwhile, production resumption from the Al-Bayda oilfield after a gap of four years also helped in increasing output. According to the Arabian Gulf Oil Company, the field was generating 10,000 barrels per day.

Though higher oil production is good news for Libya, it is actually a bit of a concern for OPEC. We’ll look at this aspect more closely in the next article.

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