Oil flows again in Libya
Protests and strikes by militant groups that overthrew the Libyan dictator Muammar Gaddafi reduced Libya's oil production to 10 per cent of its capacity in recent weeks, pushing up global oil prices and threatening to make Prime Minister Ali Zeidan's weak interim government look impotent.
Libyan oil executives said it was not clear whether the lifting of the strike by the Zintan tribal militia was the result of a negotiated settlement with the government, a short-term expression of goodwill or a negotiating tactic. The parliament recently voted to increase the salaries of civil servants, which include oil facility guards, and government officials have threatened to arrest strike leaders.
With the pipeline open, a critical source of oil is flowing again to the global market. But no resolution appears near to the more intractable strikes at export terminals and oilfields on the eastern side of the country, where the remaining two-thirds of the nation's oil production is based.
Oil production was expected to reach 700,000 barrels a day by the end of the week, up from a low of 150,000 barrels early this month. Normal output is 1.6 million barrels a day.
David Goldwyn, the State Department coordinator for international energy affairs in the first Obama administration, said the reopening of the western oilfields represented "a little bit of success". Saudi Arabia, which has been pumping at record levels in recent weeks, could lower its production now to keep prices stable.
Libya, which has Africa's largest proven reserves, is an important source of high quality oil for European refineries. Government officials have tried to reassure nervous foreign oil companies with promises of action to end the strikes. "We will soon overcome these problems and hiccups," Nuri Berruien, the chairman of the national oil company, told an oil conference this week.
The well-armed Zintan militia has backed striking oil guards demanding back pay.
Frequently Asked Questions about this Article…
A striking Zintan tribal militia opened the valves on a key pipeline linking two major western oilfields to Mediterranean port terminals near Tripoli, bringing more than a third of Libya’s oil production back online.
Oil production was expected to rise to about 700,000 barrels a day by the end of the week, up from a low of roughly 150,000 barrels a day earlier that month. Libya’s normal output is about 1.6 million barrels a day.
Protests and strikes by militant groups that helped overthrow Muammar Gaddafi forced many oil facilities to shut, reducing Libya’s production to about 10% of capacity and putting upward pressure on global oil prices.
It’s unclear: Libyan oil executives said the lifting of the strike by the Zintan militia could be the result of a negotiated settlement, a short-term goodwill gesture, or a negotiating tactic. Other strikes, especially in the east, remain unresolved.
The return of a critical western oil source relieves some supply pressure that had pushed up prices. U.S. energy officials described it as a modest success, and major producers like Saudi Arabia could adjust output to help stabilise prices.
More intractable strikes at export terminals and oilfields in eastern Libya — where about two-thirds of the nation’s production is based — continue to threaten a full return to normal output.
Libya has Africa’s largest proven oil reserves and supplies high-quality crude that is an important feedstock for European refineries, so disruptions there can have outsized effects on regional supply and markets.
Government officials have promised action to end the strikes and reassure nervous foreign oil companies. Nuri Berruien, chairman of the national oil company, said they expect to overcome the problems and hiccups soon, and parliament has also moved to increase civil servant salaries, which include oil facility guards.
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