Libya’s Political Chaos Hits Oilfields, Output Threatened

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Libya’s escalating political struggles threatened to derail the recovery in the country’s oil sector on Monday, as a commander in charge of security at its biggest field said forces loyal to a rival government in Tripoli had forced out his men.

The National Oil Corp, based in Tripoli, said the El Sharara field would reopen by Wednesday, but the growing chaos in the country has cast doubt on Libya’s ability to maintain its recent output rebound, as rival groups grapple for control.

Tripoli’s involvement, if confirmed, could threaten an oil sector that so far had largely weathered Libya’s most recent political turmoil, in which an armed group took control of the capital, installing its own government and parliament and forcing the internationally-recognised government to the east.

“The manager of the field insists reopening the field just because he wants to make good relations with the invaders,” said commander Abdulhamid Kraeer, who belongs to a brigade from Zintan allied to the government in the east and opposed to the Tripoli rulers.

“But it is difficult to reopen the (El Sharara) field as there will be, I guess, an escalation,” he said.

Libya’s oil production rose above 900,000 barrels a day in September, sharply above lows of 100,000 barrels a day in June.

But it now looks increasingly under threat, and has already fallen to around 500,000 bpd at most. The rebound contributed to a near 30 percent drop in international oil prices since June.

Geoffrey Howard, North Africa analyst at Control Risks in London, said the development at El Sharara highlighted the power struggle between the rival political and military factions that are vying to run the country.

“We could potentially see sanctions imposed if Islamist groups take control of facilities, and then Libya will struggle to attract credible buyers,” he said.

NOC also said another field, El Feel, where production was halted by a power outage due to the violence at neighbouring El Sharara, could return on Wednesday.

Separately, a sit-in protest by security guards over unpaid wages halted exports from the eastern Hariga port on Saturday, and the port remained closed on Monday.

Rebels who have seized oil ports in the past to press demand for regional autonomy said on Friday they would declare independence in the east if the world recognised the rival government in Tripoli.

Brent crude oil futures were up $1.30 at $84.69 a barrel by 1225 GMT on Monday, off a four-year low of $81.63 hit last week.

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