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.
New York Times
Frequently Asked Questions about this Article…
A striking militia from Zintan opened the valves on a key pipeline linking western oilfields to Mediterranean port terminals outside Tripoli, allowing more than a third of Libya's oil production to come back online after recent protests and strikes had cut output sharply.
Oil production was expected to rise to about 700,000 barrels a day by the end of the week, up from a low of 150,000 barrels a day earlier in the month; normal Libyan output is roughly 1.6 million barrels a day, so the recent reopening represents a return of more than a third of capacity.
Protests and strikes by militant groups and striking oil guards—backed by armed militias such as the Zintan group—reduced Libya's output to roughly 10% of capacity, as guards and militants demanded back pay and staged work stoppages at key facilities.
The reopening sends additional oil to the market and may ease some upward pressure on prices, but analysts in the article cautioned the recovery could be temporary; major producers like Saudi Arabia, which has been pumping at record levels, could also adjust output to help keep prices stable.
It is unclear: Libyan oil executives said the lifting of the strike by the Zintan militia might be a negotiated settlement, a short-term goodwill gesture or a negotiating tactic, and significant strikes remain unresolved at eastern export terminals and oilfields.
Libya has Africa’s largest proven reserves and supplies high‑quality crude that is important for European refineries, so disruptions in Libyan output can have meaningful effects on regional supply and refinery feedstocks.
Parliament voted to increase civil servant salaries (which include oil facility guards), government officials warned they might arrest strike leaders, and national oil company chairman Nuri Berruien told an oil conference the government would soon overcome the problems and hiccups to reassure nervous foreign oil companies.
Investors should watch actual production updates (whether Libya reaches the 700,000 barrels/day target), the status of unresolved strikes in eastern oilfields and export terminals, government actions toward guards and militias, and responses from major producers like Saudi Arabia that could offset supply changes and influence global oil prices.
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