Libya Halts Biggest Oilfield Sharara Amid Rebel Attacks
Libya said it halted the Sharara field, its biggest oil producer, following a rocket attack at the connected Zawiya refinery, threatening almost 30 percent of the OPEC members production.
The Sharara field, producing about 250,000 barrels a day before the disruption, was shut as a precaution after an attack two days ago on the refinery, Mansur Abdallah, director of oil movement at the Zawiya plant, said by phone today. The North African nation, still restoring output after more than a year of political unrest and protests, was producing 870,000 barrels a day as of Sept. 14, National Oil Corp. spokesman Mohamed Elharari said that day.
The disruption serves as a reminder that despite recovering export rates and the National Oil Corp.s reassurances of stable supplies, the country remains in a state of civil war, where anything can happen, Andrey Kryuchenkov, an analyst at VTB Capital in London, said by e-mail.
Libyas output has recovered after rebels lifted a yearlong blockade of eastern oil ports in July, which had diminished the North African nation to the smallest member of the Organization of Petroleum Exporting Countries. Still, Islamist militias have expanded their influence after seizing Tripoli, the capital, last month and the countrys government has had to relocate to the eastern city of al-Bayda.
Sharara is 720 kilometers (450 miles) south of Zawiya and the two sites are connected by a pipeline, Abdallah said. While Sharara has a similar capacity to the Waha field in central Libya, it was producing more prior to the shutdown, the Oil Ministrys Director of Measurement Ibrahim Al-Awami said by phone.
A rocket exploded near a crude storage tank at the Zawiya plant on Sept. 15, National Oils Elharari said yesterday. Sharara was completely shut last night after the discovery of damage to a 300,000-barrel crude storage tank at the refinery complex, Abdallah said.
The refinery remains shut after intermittent clashes in the area, Abdallah said. Once security improves, Zawiya will reopen, followed by Sharara after safety checks are completed, he said.
For Libya, I see the issue as two fold, Miswin Mahesh, an analyst at Barclays Plc in London, said by e-mail. The fluid political situation can lead to unplanned supply disruptions, while sustaining higher production in the longer term might be difficult given the absence of strong governance mechanisms, he said.
Brent crude futures reversed earlier losses on the disruption at Sharara. The benchmark, used to price more than half the worlds oil, climbed as much as 56 cents to $99.61 a barrel on the London-based ICE Futures Europe exchange, erasing an earlier drop of 38 cents. It subsequently eased to $99.24 a barrel as of 1:06 p.m. local time.
To contact the reporters on this story: Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
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Libya Halts Biggest Oilfield Sharara Amid Rebel Attacks