Libyan oil and gas output on the rise despite threats as civil war plays out

• Date: 01 July 2019
• Published date: 01 July 2019
• DOI: http://doi.org/10.1111/oet.12716

FOCUS

Libyan oil and gas output on the rise despite threats as civil war

plays out

The last few months have seen rising civil conflict in Libya

between General Haftar's Libyan National Army, based in

the east of the country, and the UN-recognized Government

of National Accord, under Prime Minister, Fayez al-Sarraj—

which holds parts of the west of the country, including the

capital Tripoli. Despite this, oil and gas output has managed

to keep rising over the last year—hitting 1.3 mn bd in May,

although as long as the unrest continues output remains

under threat. Some fields have already been shut-in, and the

unrest has undermined ambitious expansion plans that had

been penciled in for 2019. Overseas investment is essential,

but some international oil companies have evacuated staff,

and only one has any plans to drill this year.

General Khalifa Haftar and his Libyan National Army

(LNA) launched a major attack to take over the Libyan capi-

tal of Tripoli from the UN-backed Government of National

Accord (GNA) in March. The fighting has continued on-

and-off ever since, and has worsened the already weak secu-

rity situation across the country. In addition to the area sur-

rounding Tripoli, there have been repeated attacks on the

facilities at the 315 000 bd-capacity El Sharara fields in the

Murzuq basin in Libya's far southwest (see Figure 1). The

fields there are operated by the Repsol-led Akakus consor-

tium, which also includes Total, Austria's OMV and

Norway's Equinor, as well as Libya's state-run National Oil

Company (NOC).

There has also been an escalation in violence around the

“oil crescent”ports based in the Gulf of Sidra along the mid-

dle of the Libyan coast, including Es Sider and Ras Lanuf,

which have a combined export capacity of 560 000 bd. This

coast and the inland area behind it contain a large proportion

of Libya's oil infrastructure and production, which makes it

an important prize for the rival factions.

Military control of the oil crescent has changed hands a

few times in the past year, and is now (early June) controlled

by a faction loyal to General Haftar. If fighting continues

near the terminals, oil exports could be hit. NOC said that

Ras Lanuf was becoming militarized, making the major

crude export terminal a potential target in the country's

ongoing civil war. Other NOC assets have been directly hit

by the fighting and it has struggled to get its staff and fuel to

its oil and gas installations.

The revenue that oil and gas can generate is substantial,

with the Tripoli-based GNA government receiving a total of

$24.6 bn in 2018, according to Middle East Economic Sur-

vey (MEES), with some income no doubt also flowing to

the LNA (while it is not UN-recognized, General Haftar's

LNA is said to have support from Egypt, France, Russia

and, to some extent, the United States).

1|CRUDE OUTPUT HOLDS UP

Despite all the unrest, crude output steadily rose from

600 000 bd in 2016 to reach 990 000 bd in 2018 (see

Figure 2)—and kept rising to a 6-year high of 1.2 mn bd in

March; and 1.3 mn bd in May, according to S&P Platts. But

there were also direct attacks on infrastructure this spring,

including on the eastern Zella oil field. If the unrest continues,

experts are warning of potentially dramatic falls in output

once again: Since Ghaddafi's overthrow in 2011, Libya's oil

output has fluctuated according to its state of internal conflict,

and has often come close to zero—asin 2011 and 2015. News

of oil output fluctuations at major fields can quickly impact

global oil markets andprices.

At the time of writing, it appeared that General Haftar was

consolidating his control of most of the country outside Trip-

oli. He has expanded his presence as a result of the recent

fighting, and now effectively controls territory that includes

five of the country's nine oil export terminals (including the

Oil Crescent); and the oil-rich Sirte Basin and Sharara, which

includes the overwhelming majority of Libya's producing

fields. Haftar also took control of the shut-in 315 000 bd El

Sharara field in February, which had been closed by pro-

testers in December. The LNA has also taken control of stra-

tegic locations and military sites in and around the southern

city of Sebha, largely through peaceful agreements with local

tribes and groups.

DOI: 10.1111/oet.12716

Oil and Energy Trends. 2019;44:3–17. wileyonlinelibrary.com/journal/oet © 2019 John Wiley & Sons Ltd 3