Dec. 18, 2016 2:19 p.m.
BENOIT FAUCON and HASSAN MORAJEA
Opposition from local militia led to risk of a blockade, oil official says
Libya’s National Oil Co. has for now stopped the relaunch of production at oil fields in the country’s west, Libyan officials said Sunday, after a militia threatened to block the petroleum from reaching the market.
The aborted restart is a blow for Libya’s oil industry, which has been counting on the country’s big western fields to kick-start its comeback. A pipeline that can transport over 400,000 barrels a day from two western fields had partly reopened on Wednesday, but efforts to send that oil to coastal ports are now off, oil officials said.
Oil traders are closely watching Libyan output. The country is a member of the Organization of the Petroleum Exporting Countries, but it was exempted from the cartel’s recent deal to cut production because its output has been disrupted in recent years, falling to less than 300,000 barrels a day at times this year, compared with its height of over 1.6 million barrels a day during dictator Moammar Gadhafi’s reign.
Production has increased to over 500,000 barrels a day in recent months. The restart of the Western fields could add as much as 400,000 barrels a day to the market—nearly as much as Saudi Arabia pledged to cut as part of the OPEC deal.
The abrupt decision to halt the fields’ resumption illustrates the difficult task facing Libya’s National Oil Co. as it tries to ramp up oil production after years of depressed output since Gadhafi’s 2011 death. The country has splintered between rival governments in the west and east and among a host of militias with shifting allegiances.
The deal to restart production involved talks with two separate militias that control different aspects of the western fields. But a faction of the Petroleum Facilities Guard dominated by the Toubou ethnic group has now protested that it had been left out of negotiations and wants one of the other militias to leave the fields.
“If they don’t, we will attack,” Eli Egray, head of the Toubou-led faction, told The Wall Street Journal. The militias are all seeking more employment and the payments of back wages for guarding the facilities.
“My men are not even being paid salaries...It’s not right and it must stop,” Mr. Egray said.
Because of the risk of blockade, “it was not safe” to continue trying to restart production at those fields, a Libyan oil official said.
Mr. Egray, whose group controls the entrance to the fields, confirmed his group was protesting with the government for not being included in the deal.
Libyan oil officials said they still hope to restart production in the coming days. A National Oil Co. spokesman declined to comment.