The specter of halting Libyan oil exports has resurfaced in the aftermath of the storming of the El Feel oil field by protesters, protesting the kidnapping of the Minister of Finance of the Government of National Accord, Faraj Boumtari, after news of his candidacy for the post of central governor.
Against the background of the storming of the field, which is one of the largest oil fields in Libya, oil prices rose, which increased fears of a scarcity of global crude supplies.
Brent crude, the global benchmark, was trading by 03:30 pm GMT (06:30 pm Mecca time) near $81 a barrel, after breaking out of the narrow trading range it had been stuck in for two months.
Oil production in Libya
Protesters have stopped the production of the El Feel oil field, which has a production capacity of 70,000 barrels per day, amid fears that the protests will spread to the El Sharara field, the largest oil field in Libya.
The average oil production in Libya is currently about 1.2 million barrels per day, amid plans to increase production to 1.3 million barrels per day by the end of the year, with efforts to increase it to two million barrels per day over the next 3 years.
“Potential supply disruptions from Libya have a huge impact, because crude oil has rallied recently as macro risks ease and supply cuts from OPEC+ start to have an impact,” said Rebecca Babin, chief energy trader at CIBC Private Wealth.
“The current production at risk is likely between 60 and 90 thousand barrels, but the impact of the knockout could be much greater,” she added, referring to the El Feel field outage, according to Bloomberg.
Libyan oil production and exports have stopped several times, in whole or in part, during the past years, in light of the political conflicts the country is witnessing.
Libya’s oil production during the past months has witnessed stability, with the steps taken by the National Corporation to avoid closing fields and improving workers’ salaries, which helped increase production by about a quarter since January 2022 to an average of 1.2 million barrels per day, currently.
And the stability of Libyan oil exports supported the revenues of the country’s general budget, as the total sales of oil, gas and oil derivatives during last May amounted to about $1.661 billion, including $1.572 billion in crude oil sales, $29 million in gas and condensate sales, and $60 million in oil derivatives. and $616,000 from the petrochemical sector.
Boumtari kidnapped
The head of the Supreme Council of Al-Zawiya Tribes, Sheikh Al-Senussi Al-Haliq, said that the tribes in solidarity with his tribe closed the Al-Sharara and Al-Fil fields, rejecting the kidnapping of Faraj Boumtari on charges of running for the position of central governor.
He added, “We are heading to close more fields, and they will not be opened except with the overthrow of Al-Kabir and the change of the government of Abdul Hameed Al-Dabaiba.”
Protesters from Azwaya had stormed the El Feel field, announced its closure and halted production, and demanded the workers to leave in protest of the kidnapping of Boumtari.
An administrative source from the El Feel field said: “The protesters asked us to leave and not return until the fall of the great friend,” according to the Libyan newspaper Al-Marsad.
Today, Thursday, July 13 (2023), a parliamentary committee accused the Internal Security Service of kidnapping the Minister of Finance of the former Government of National Accord, Faraj Boumtari, and a statement issued by those who called themselves “youth, notables and sheikhs of the Al-Zawiya tribe” threatened to close the oil fields and ports if the former minister was not released.
The Committee for Justice and National Reconciliation in the House of Representatives held Boumtari responsible for the party that kidnapped him, and called for his release without restriction or condition, hinting that the necessary measures would be taken with the responsible local and international bodies related to the protection of freedoms and human rights.
A statement issued by the youth, notables, and sheikhs of the Al-Zawiya tribe condemned what they described as the unjustified kidnapping of Boumtari, during his visit to the capital, Tripoli, and threatened to lock the oil fields and ports if he was not released.
They said that Boumtari was kidnapped and taken to an unknown destination upon his arrival at Mitiga International Airport for a regular visit to the capital, Tripoli, explaining that Boumtari is a candidate for the position of central governor, which made him vulnerable to danger and kidnapping.
The impact of political differences on oil production
The Libyan researcher interested in the oil sector, Mahmoud Mohamed, said: “Until now, according to the information and sources of the El Feel field, only what has been closed, as well as according to the statements of the Zawiya tribe, which closed the field in protest against the arrest of Faraj Boumtari by the Internal Security Forces at Mitiga airport two days ago.”
He stressed that the developments witnessed by the country during the last 48 hours are negative for the Libyan oil sector, which has suffered many closures at a time when the Libyan Oil Corporation is striving to reach two million barrels per day.
He explained, in statements to the specialized energy platform, that the closures are illegal, and will have negative effects on the fields and Libyan oil production in the short and medium term.
The Libyan oil sector has suffered from the political turmoil in which the country has lived since the overthrow of President Muammar Gaddafi in 2011, in light of the political stalemate between rival governments and factions.
Libyan oil production reached 1.557 million barrels per day in 2009, but it fell sharply to 462 thousand barrels per day in 2011, before recovering in the following years.
Since 2017, Libya’s oil production has followed an upward trend; It increased from 811 thousand barrels per day to 951 thousand barrels in 2018, before it recorded 1.097 million barrels per day in 2019, to reach 1.2 million barrels currently.
Libyan oil exports
The closure of the El Feel field came days after the escalation of the political dispute in Libya, against the background of the threat of the government charged by the House of Representatives to appoint a judicial guard to manage the revenues of Libyan oil exports.
The escalating political disputes in Libya, under the presence of two governments, the unity government led by Abdul Hamid al-Dabaiba and the parliament-appointed government of Osama Hammad, put the fate of the head of the National Oil Corporation, Farhat bin Qadara, in the wind.
The commander of the Libyan army, Khalifa Haftar, had called for the formation of a committee for a fair distribution of oil wealth, and gave a deadline until the end of next August, before his forces enter to resolve disputes over the revenues of Libyan oil exports.
And Libyan Oil Minister Mohamed Aoun stressed in previous statements that the repetition of the threat to stop oil exposes the country to the possibility of losing its importing customers irreversibly, explaining that returning to the declaration of “force majeure” will push Libya’s customers to search for alternatives.
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