Libya oil output holds up despite port shutdowns and protests

Libya’s oil output is holding up at about 700,000 barrels a day, according to western diplomats and analysts, helping ease fears the shutdown of ports and facilities by protesters had left production on the brink of collapse.

The oil ministry in the capital Tripoli, representing one faction in a long-running conflict for control of the country and its hydrocarbon resources, warned this week that output was falling towards just 100,000 b/d or less than 10 per cent of capacity.

Fears of a collapse in Libyan supplies have been one factor supporting global oil prices that are already trading at $120 a barrel following Russia’s invasion of Ukraine, so production levels are being watched closely in the market.

“We are aware of the oil ministry claim that Libyan oil production dropped to 100,000 barrels per day,” said a western diplomat. “However, we believe that to be inaccurate; actual production is significantly higher.”

The diplomat said that, while Libya’s production fluctuated on a “daily basis”, only 30 to 40 per cent of the country’s overall production is down.

Libya’s oil wealth, the government’s primary source of revenue, has been repeatedly caught up in struggles for control between rival factions in the divided country. Mohamed Oun, the oil minister in Tripoli, has a fractious relationship with Mustafa Sanalla, the chair of National Oil Corporation, the state oil company. Oun had previously tried to sack Sanalla.

“The information from sources on the ground suggests that the collapse in output is nowhere near what the oil ministry has said,” said Tim Eaton, a researcher at Chatham House who focuses on the political economy of the Libyan conflict.

“It Is clear that relations between Oun and Sanalla have broken down irrevocably,” said Eaton. “The minister’s statements are clearly aimed at undermining Sanalla and seeking his replacement.”

NOC, which is based in Tripoli, is the only Libyan institution authorised under UN Security Council resolutions to sell Libyan oil. It has not announced the current production level.

Control of oil revenue has been the prize at the core of conflicts that have wracked Libya since the overthrow and killing in 2011 of Muammer Gaddafi, the country’s long-time dictator. Blockades and invasions of oilfields and export facilities have been a frequent tactic used by rivals to apply political pressure.

In the latest wave of closures protesters allied to Khalifa Haftar, a renegade general who controls eastern Libya, have been blockading oilfields and ports for almost 10 weeks in a bid to force out Abdul Hamid Dbeibeh, the prime minister based in Tripoli, by depriving his government of revenue.

He was appointed through a UN-sponsored process last year, but was supposed to remain in office only until elections.

Haftar supports Fathi Bashagha, a former interior minister who was appointed PM in March by the eastern-based parliament.

Eaton said the US was pushing to find an agreement between the factions, partly motivated by a desire to keep Libyan oil flowing at a time when record petrol prices are threatening the economy.

“The Americans understand this problem and they are motivated by the west’s desire to increase global oil output,” he added.