April 11, 2017 / 12:50 AM / 2 years ago

Libya's Sharara oilfield shut again as pipeline blocked: sources

LONDON/BENGHAZI, Libya (Reuters) - Production at Libya’s Sharara oilfield has been halted after an unknown group blocked a pipeline just one week after a previous shutdown, a Libyan oil source and a field engineer told Reuters on Monday.

A general view of the El Sharara oilfield, Libya December 3, 2014. REUTERS/Ismail Zitouny/File Photo

Sharara’s production had recovered to 213,000 barrels per day (bpd) by Sunday, when the latest stoppage began. The new blockade led the North African country’s National Oil Corporation (NOC) to declare force majeure on loadings of Sharara crude from the Zawiya export terminal, the oil source said.

Libya’s national production has more than doubled since last year after a blockade at major eastern oil ports ended, but the oil sector has continued to suffer from frequent disruptions due to armed conflict, political rivalry and local protests.

Groups with financial or political grievances have often closed oil facilities to make demands for salary payments or funds for local development.

In March, the pipeline leading from Sharara was blocked for a week, triggering force majeure on shipments.

The NOC was hoping to boost output from Sharara to 270,000 bpd later this month. The field is operated by the NOC in partnership with Repsol, Total, OMV and Statoil.

Before the latest shutdown at Sharara, the NOC said national oil production stood at 703,000 bpd. The NOC was aiming to raise national output to 1.1 million bpd by August, but acknowledged that such targets depend on the corporation receiving money for its operating budget and oil facilities staying open.

“NOC faces huge challenges including the regularity of NOC’s obtaining of employees’ salaries in full and in a timely manner, the budgets related to maintenance operations, the blockades, and military actions which hinder production,” the company said in a statement last week.

The NOC also cited “some parties’ offering money to some militias, which encourages others to follow blockade tactics to blackmail the state”.

Production of oil, gas and condensates have also been interrupted at the western Wafa field, where an armed group closed off pipelines on March 26 near the town of Nalut. The NOC said on Monday it had been losing about $9.8 million in export revenues daily due to that stoppage.

Oil output from Wafa had dropped by 4,000 bpd after gas supplies at the field were shut off, but that will rise to 10,400 bpd once oil storage reservoirs are filled, the NOC said. It warned that a longer-term stoppage would carry heavier production risks and financial penalties.

A Libyan shipping source said no oil tankers were currently at Zawiya nor were any expected to arrive in the near future.

A preliminary loading schedule for Sharara crude in May seen by Reuters showed eight tankers were expected to load around 600,000 barrels each throughout the month.

In addition to providing an export stream, the oilfield feeds the 120,000 bpd Zawiya oil refinery, Libya’s largest operating plant.

During a two-year shutdown of the field which ended in late 2016, the refinery ran on reduced rates as it had to rely on NOC shipping crude to the site by sea from other oil terminals.

Additional reporting by Aidan Lewis in Tunis, writing by Aidan Lewis and Ahmad Ghaddar; editing by Susan Thomas and G Crosse

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