By Lin Noueihed and Julia Payne
LONDON, June 9 Libya's attendance at Wednesday's
OPEC meeting will be an oddity for historians of the oil
exporters club - a member with virtually no oil for sale.
As it struggles with its worst crisis since the 2011 war
that toppled Muammar Gaddafi, early talk of a swift resumption
of output have given way to pessimism, leaving OPEC with a
longer lasting hole of over one million barrels per day in its
Production is below 200,000 barrels per day, Oil Minister
Omar Shakmak said on arrival in Vienna on Monday for the
meeting, a fraction of the 1.6 million bpd Libya pumped before
the 2011 conflict.
"Until the government gets control it cannot export on a
normal basis... It is unlikely Libyan oil production will
increase significantly in the next six months," said Charles
Gurdon, managing director of Menas Consulting.
"Most of 2014 will effectively be written off."
The near absence of Libyan oil from international markets
has helped anchor prices in a narrow range around $110 a barrel.
That is a comfortable level for OPEC and few expect the cartel
to change its output target for the rest of the year.
Rebels have blocked Libya's major ports and fields since
last summer, slashing output.
With a renegade general launching war on Islamists,
successive prime ministers struggling for legitimacy and a lack
of oil revenues, the caretaker government could be forced to
divert what barrels were destined for export to domestic
refineries to supply gasoline to the capital.
Foreign oil companies have pulled out staff and frozen
exploration activities, while Libya's hungry European customers
have turned elsewhere for more steady supplies.
Monday's court ruling resolving a standoff between rival
governments was welcomed by rebels holding some of Libya's
largest oil terminals at Es Sider and Ras Lanuf and raises hopes
that a deal to restore key export facilities could be reached
But even if a deal to reopen all the ports and fields is
made, industry insiders and officials from Libya's National Oil
Corp (NOC) say it is hard to tell how much damage the closures
have already caused to its precious oil infrastructure or how
long it would take to return to prewar capacity.
Libya's western El Sharara oilfield may take months to reach
its full output of 340,000 bpd, for instance, because at least
20 damaged well pumps need to be replaced.
Once output can build up, the damage is taking its toll on
the country's production capacity. The International Energy
Agency, the West's energy watchdog, in May cut its estimate of
Libya's sustainable output capacity to 1 million bpd.
Fires on pipelines elsewhere and lack of maintenance could
make resumption of exports a long and costly process.
Technically, Libya can still pump upwards of 1 million bpd
but the new NOC chairman Mustafa Sanallah said it would only
ramp up exports gradually - and in cooperation with OPEC. That
would help avert a sudden slide in oil prices.
"From a technical point of view, our facilities are ready
...and our people can resume production very soon," Sanallah
told a Libyan oil conference in London last month.
"But in order to resume production, we have to agree with our
rivals, partners and with OPEC. We have still high storage of
oil... So we have to export our oil gradually and by good
cooperation between Libya and OPEC."
At a London conference last month on on Libya's energy
sector presentations focused on plans for a new oil law,
enhanced oil recovery and even pipeline upgrades, skirting
around the fact that the state could not even guarantee the flow
"It is a very difficult market to predict," said Eric
Oudenot, of Boston Consulting Group. "Nobody is really able to
craft a strategy for Libya as it is too unstable."
(Additional reporting by Ulf Laessing in Tripoli, Alex Lawler
in Vienna; Editing by William Hardy and Veronica Brown)