TRIPOLI: As a battle for market share rages in the oil industry, Libya is struggling to stand its ground.
The holder of Africa’s largest reserves is producing 432,000 barrels of oil a day, according to Mustafa Sanallah, chairman of Libya’s National Oil Corporation, more than 300,000 b/d of which is exported.
Although an improvement from last year’s low of around 200,000 b/d, the Opec member’s output is still down more than 70 per cent from levels achieved before the 2011 revolution that ousted former ruler Muammer Gaddafi.
Since the civil war, Libya’s oil industry has been hit by unrest. The state-run oil company has been caught in the middle of a conflict that has divided the country between an internationally recognised government and an Islamist militia that controls the capital of Tripoli. Attacks by radical group Isis, worker strikes and sabotage of facilities have also hampered the oil sector.
Mr Sanallah said Libya was looking to raise output by 200,000 b/d in the next five weeks, through the repair of damaged fields and dialogue with the factions that have brought about blockages.
The Es Sider port, the country’s largest export terminal, has been under force majeure since December, when violence between rival groups led to a fire. Fighting damaged fields feeding into it in March.
“The oilfield and terminal are still under maintenance. We are not lifting force majeure right now. It is still very fragile,” said Mr Sanallah.
Mr Sanallah said the National Oil Company was working to rebuild relations with factions that would enable El Sharara and El Feel oilfields to pump in excess of 400,000 b/d once more.
“Dialogue is improving day after day. Hopefully [we will be able] to open the valves very soon,” Mr Sanallah said.
Although Libya still harbours ambitions to increase production this year to 1m b/d as demand from India, China, Japan and eurozone countries remains robust, analysts are not so optimistic.
“Libyan production has crept up from recent lows, but these gains are minimal. I don’t think they will be able to get above 800,000 b/d,” said Richard Mallinson, geopolitical analyst at Energy Aspects.
“Even if all the political and security issues were to disappear overnight, it would struggle to get the 1m b/d target. Their ability to produce at these levels has gone, as the fields have not been properly maintained,” said Mr Mallinson.
Economically weaker Opec members such as Libya, Iraq, Venezuela and Nigeria have suffered greatly in a lower-oil-price environment compared to producers in the Gulf.
Opec’s November decision not to cut production and focus on a market share battle accelerated a slide in oil prices to $45 a barrel in January. Although crude has rebounded to $60-65 a barrel, Libya is still cash constrained.
The ability of Opec countries such as Saudi Arabia to increase production to new heights has irritated Libya, raising the cartel’s production to 31m b/d, which is 1m b/d more than its output target.
“There is no longer a market regulator. So everyone is looking at their own market share. Others have taken our share over the past few years, and it’s our right to regain it,” said Mr Sanallah.
Oil market observers say any future Opec discussions about individual quotas would put Libya in a difficult position, as its expectations do not align with its production abilities.
