Abu Dhabi, UAEMonday 6 April 2020

Supporters of Khalifa Haftar shut off Libya's biggest oil field

Closing of pipeline chokes off production from Sharara a day after major oil export terminals were seized

Tribesmen protest in front of the Zueitina Oil Terminal in eastern Libya which they seized on January 18, 2020. Reuters
Tribesmen protest in front of the Zueitina Oil Terminal in eastern Libya which they seized on January 18, 2020. Reuters

Forces loyal to Libya's Field Marshal Khalifa Haftar shut off production at major oil fields on Sunday as the military commander attended an international conference in Germany aimed at ending the country's long-running conflict.

Libya's National Oil Corporation said members of the Petroleum Facilities Guard under the command of Field Marshal Haftar’s Libyan National Army shut down the Hamada-Zawiya oil pipeline, forcing it to curtail production at the Sharara and El Feel oil fields.

The Hamada station hosts pipelines for Mellitah Oil and Akakus, the operators at El Feel and Sharara respectively, the state oil agency said.

The move, together with the seizure Libya's eastern oil export terminals on Friday by tribesman loyal to Field Marshal Haftar, has virtually crippled the country's oil sector, its main source of revenue.

The NOC declared force majeure on exports from the ports of Brega, Ras Lanuf, Hariga, Zueitina and Es Sider after the seizures. It said this would result in a loss a loss of crude oil production of 800,000 barrels per day and financial losses of approximately $55 million (Dh200m) per day.

The country’s oil production was about 1.3m bpd in the week before the closures.

Sharara, operated by the NOC in a joint venture with Spain's Repsol, France's Total, Austria's OMV and Norway's Equinor, has production of around 300,000 bpd. El Feel, operated by the NOC and Italy's Eni produces about 70,000 bpd.

The talks in Berlin are aimed at formalising a week-old ceasefire in the offensive by Field Marshal Haftar's forces targeting militias that support the UN-recognised Government of National Accord based in Tripoli. The Libyan National Army is aligned with a rival government based in eastern Libya.

The tribesmen who seized the ports accuse the Tripoli government, led by Prime Minister Fayez Al Sarraj, of using the country's oil revenues to pay foreign fighters. This was in reference to Turkey’s decision at the start of this year to send its troops and fighters from Syria's war to Libya to prop up Mr Al Sarraj’s government. The Syrian fighters are reported have been offered $2,000 a month to fight for the GNA,

The NOC, which has sought to stay neutral amid the conflict that has dogged Libya since the toppling of dictator Muammar Qaddafi in 2011, channels oil and gas revenues through the central bank. The bank mainly works with the Tripoli government but also pays some public servants in the east.

The NOC chairman Mustafa Sanalla criticised the port closures, saying: "The oil and gas sector is the lifeblood of the Libyan economy and the single source of income for the Libyan people. They are not cards to be played to solve political matters."

Libya’s oil production has already plummeted to the lowest level since September 2016, data compiled by Bloomberg show.

Updated: January 19, 2020 09:33 PM

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