In its effort to restore oil output, Libya has set target to resume exploration on its largest oilfield.
However, this has raised concerns for the allied OPEC+ that has cut oil production till next month to restore the crumbled oil prices.
Libya’s oil industry has been in total disarray after a group of paramilitary formations affiliated with the Libyan National Army of eastern Libya strongman, General Khalifa Haftar, occupied the country’s oil export terminals, pipelines and fields in January.
The blockade came amid continued fighting between the LNA, which is loyal to the eastern Libyan government, and the forces loyal to the Government of National Accord, recognised by the United Nations.
As a result of the blockade, Libya’s oil production – which had stood at more than one million barrels per day at the start of January – collapsed to less than 100,000 bpd.
Last week, the GNA said it had taken full control of Tripoli from Haftar’s LNA.
Libya’s National Oil Corporation said on Sunday that production at the 300,000bpd Sharara oilfield had resumed after negotiating the opening of an oilfield valve that had been closed since January.
The first production phase at Sharara will begin at a capacity of 30,000bpd, Libya’s state oil firm stated, noting that production was expected to return to full capacity within 90 days due to the damages caused by the long shutdown.
Libya also restarted a second oilfield over the weekend, the 70,000bpd El Feel, which is linked to Sharara, a field engineer told Reuters on Sunday.
The United States Embassy in Libya welcomed the re-opening of the Sharara oilfield, saying, “Now is the time for all responsible parties to reject attempts to militarise the energy sector and subjugate critical infrastructure to foreign interests.”
While the resumption of much-needed oil production is crucial for Libya’s oil revenues and economy, the restart of Libyan oilfields could give OPEC+ another headache over the next few months, on top of the uncertainty about demand recovery.
If Libya, which is exempt from the OPEC+ cuts, returns to pumping one million bpd in the coming months, “it would prove to be a bit of headache to OPEC+,” ING strategists, Warren Patterson and Wenyu Yao, said on Monday.
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