Libya Oil Supply Reduced by Security Threats, Port Closure

Libya’s biggest oilfield has reduced crude production by more than 30% in recent days and the Zueitina export terminal ceased loadings over the weekend, throwing the OPEC country’s output back on a downward spiral.

Output at the Sharara field was down to 200,000 barrels a day on Sunday, compared with 300,000 barrels a day about a week ago, a person familiar with the matter said on Sunday, asking not to be identified because the information is confidential, Bloomberg reported.

Workers were being kept from certain areas for their own safety after two company vehicles were stolen at gunpoint, the person said.

Zueitina Port ceased loading on Saturday after employees demanded better working conditions, according to Merhi Abridan, head of the worker’s union.

Libya’s crude output and exports reached a three-year high last month as fighting among armed militias abated and leaders of the country’s rival administrations agreed in principle on steps to unite the nation.

Production had been on the decline for years due to clashes between armed groups and closures of fields. Libya was exempted from production cuts by the Organization of Petroleum Exporting Countries because of the instability.

The field has experienced several brief shutdowns caused by different groups. It was closed for two days in June due to a protest by workers there. Pumping was interrupted for “hours” last week after armed protesters shut some facilities, the NOC said at the time.

The country’s crude production may be further hampered by the port halt. Zueitina is the export terminal of Zueitina Oil Company, a joint venture between NOC, Occidental Petroleum Corp. and Vienna-based OMV AG, according to its website.

Zueitina exports an average of six crude cargoes a month, each 600,000 to 630,000 barrels, according to Abridan, the union head.

In 2015, Libya’s NOC declared force majeure at Zueitina and said the port was closed for all exports due to a deteriorating security situation. Force majeure, a legal status protecting a party from liability if it cannot fulfill a contract for reasons beyond its control, was lifted in November.