(Bloomberg) -- Libya boosted oil production to more than 1 million barrels a day, a milestone for the North African country after civil war all but shut its energy industry.
The OPEC member, home to Africa’s largest crude reserves, ramped up production in the past six weeks amid a truce between rival military forces. It was pumping 800,000 barrels a day last week, and the state-run National Oil Corp. said Saturday that output now exceeds the million-barrel level. That’s the first time the landmark has been reached since early January.
Libya’s resurgence -- it was producing less than 100,000 barrels a day in early September -- has taken oil traders by surprise and weakened prices just as renewed coronavirus lockdowns in Europe and accelerating cases in the U.S. stifle energy use. Benchmark Brent crude fell 3.6% to $39.45 a barrel on Friday, extending its slump this year to 40%.
The speed of Libya’s oil recovery is a “huge achievement,” the NOC said in a statement. Still, the company faces “very big financial difficulties,” which will make it tough to fix dilapidated and damaged oil facilities.
Daily output at the western field of Sharara, Libya’s biggest, declined to 175,000 barrels on Saturday from 250,000 because a control station was closed following a pipeline leak, according to a person familiar with the matter. Oil workers have started to repair the pipeline but don’t yet know how long it will take, the person said.
The NOC also warned it might not be able to sustain current levels of production because “some entities” were trying to hinder its efforts. While Libya’s warring sides are meeting this month to appoint a unity government, there’s still plenty of disagreement between them and no guarantee they’ll strike a permanent peace deal.
The extra Libyan barrels are an unwelcome complication for OPEC+, a coalition of the Organization of Petroleum Exporting Countries and other producers such as Russia. The group was set to increase output by almost 2 million barrels a day in January -- part of a plan to ease cuts that began in May at the height of the pandemic. But it may be forced into a delay with crude prices under pressure again.
Libya aims to pump 1.3 million barrels a day by the beginning of 2021, NOC Chairman Mustafa Sanalla said in an Oct. 31 interview. Although the Arab nation’s strife exempted it from the OPEC+ supply curbs, it will coordinate with other members, Sanalla said. So far, there’s been no suggestion from the group that Libya should lose its exemption.
The country’s energy sector was mostly shuttered in mid-January when Khalifa Haftar, a Russian-backed commander based in the east, blockaded ports and fields. Haftar, who was battling the United Nations-recognized government of Prime Minister Fayez al-Sarraj, lifted his blockade in mid-September after winding down hostilities in June.
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