FOCUS: Libya's output remains under threat despite recent rises
| Date | 01 December 2016 |
| Published date | 01 December 2016 |
| DOI | http://doi.org/10.1111/oet.12441 |
FOCUS
Libya’s output remains under threat despite recent rises
AnumberofpoliticaldealsamongLibya’swarringfac-
tions have allowed oil production to increase from just
over 200,000 bpd at the beginning of August to nearly
600,000 bpd in November. e optimism that has been
engendered as a result has led to predictions of further
growth in output. e National Oil Company (NOC)
has announced a target of 900,000 bpd to be achieved by
the end of 2016.
e optimism, however, has been overdone. e
many deals with the various armed groups remain pre-
cariousandarehighlyvulnerabletoinghtingamong
the various factions involved. Even if most or even all
of them manage to hold for a while there is widespread
damagetothecountry’soileldsandinfrastructureasa
result of the ve-year -old civil war (see Box Background
to the Conict). e large drop in oil revenues result ing
from both thefall in oil production and lowglobal prices
mean that Libya does not have the money to rebuild its
oil industry. In any case, the comprehensive refurbish-
ment of the oil sector would require the pacication of
the areas aected; and there is little sign that this can be
achieved in the near future.
Making deals
is year has seen a series of eorts to bring together
the countr y’s two rival gov ernments based in B aida in
the east of the country and Tripoli in the west. A new
Presidency Council (PC) has been established in Tripoli
as the basis of a single national government, alongside a
parliament in Tobruk.
e PC, however, has been unable to impose its
authority on the whole country owing to the continued
existence of armed groups that oppose it, including the
Libyan National Army (LNA). e LNA recently seized
control of three important oil export terminals from a
militia group known as the Petroleum Facilities Guard.
Libya’s export terminals have suered repeated attacks
by rebel groups. By possessing them, they can cause
the shutting-in of the oilelds that use the terminals to
export their crude oil. About 85% of Libyan oil is nor-
mally exported, but attacks on terminals have reduced
this proportion (see Table A).
ereductionofoilexportsbyabout1mnbpdfrom
their pre-civil war levels has caused considerable nan-
cial hardship toboth the oil industry and the country in
general. All revenues from oil are paid to NOC, which
then remits them to the Central Bank of Libya. e Cen-
tral Bank then uses them to meet the running costs of
the government. e revenues, however, do not cover all
of these costs and payments to NOC for its oil haveb een
delayed, aecting not only NOC but its foreign produc-
tion partners as well.
Background to the Conict
Of all the countries aected by the unrest that is
sweeping across th e Arab world, the one that has suf-
fered the greates t loss of production is Libya. From a
level of 1.7 mnbpd in 2010, Libya’s output has fallen
on some occasions as low as 150,000 bpd, as was the
case in March 2014.
Much of the disruption to L ibya’s oil production h as
been caused by problems at the country’s marine
export terminals, which have frequently been closed
by strikes and other for ms of action directed against
the central government. e disruption has been
concentrated on ve terminals in the east of the
country at al-Sidra, Ras Lanuf, Marsa al-Brega,
Zueitina, and Marsa al-Hariga. ese terminals
account for about two-thirds of Libya’s export
capacity and also providethe only outlet for most of
the country’s main oilelds.
Libya’s current unrest dates from the civil war of
2011 that saw the overthrow of its ruler, Colonel
Muammar Qadha. e roots of the present trou-
bles l ie muc h de ep er, h ow ev er, and com e f rom
regional rivalries that date-back centuries in some
cases. e principal of these regional conicts is
between the western region, centerd on Tripoli
and known historically as Tripolitana, and the area
known as Cyrenaica in the east, where the regional
administration allied itself with a number of armed
groups opposed to the government in Tripoli and
successfully disrupted the export of oil through ter-
minals on the eastern side of the country as part of
a policy designed to weaken the central government
by depriving it of revenue f rom the export of oil.
One eect of this is that many employees have not
been paid and a number have been laid o. is, in turn,
has led to unrest, especially at the country’s main oil ter-
minals, which have been hit by strikes and other protests.
e problems have aected most of the main export ter-
minals, including the three recently taken over by the
LNA, at al-Sidra (Es Sider), Ras Lanuf and Zueitina,
along with a fourth at Marsa al-Brega. Together, these
account for 900,000 bpd, or nearly 60% of Libya’s total
terminal capacity (see Ta ble B ) .
e handing over of the oil terminals to NOC, while
being an important step in allowing Libya’s oil produc-
tion, is only a rst ste p. Some export facilities have be en
damaged, including several storage tanks at al-Sidra,
which will severely limit the amount of oil that can be
exported through the port until the damage has been
© 2016 John Wiley& Sons Ltd
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