With the Libyan regime and its forces now focused on the western side of Libya, much of the Sirte Basin oil infrastructure is outside the control of any central authority. Workers are reportedly forming committees in some facilities to protect equipment from looting or damage and the Zuwayya tribe has moved in to “occupy” some larger fields.
The unravelling of Colonel Muammar al-Gaddafi’s regime has already brought most of Libya’s 1.3-million-b/d oil exports to a standstill, with some occasional cargoes reported to be leaving the country from central and eastern ports such as Es Sider, but a great deal of uncertainty hovers over any wholesale restart while the political impasse continues.
Much of the eastern side of the country, which includes one of Libya’s four main producing areas—the Sirte Basin—is now reportedly free of Gaddafi’s forces. With no co-ordinated or centralised opposition, however, the “control” of the fields and infrastructure located in that area is likely to remain fluid for some time, with the potential for various elements to control different aspects of the industry.
Attacks on oil infrastructure by looters have been reported
Some Western oil workers still in the country have reported attacks by looters. Reports have also suggested that the al-Zuwayya tribe, which earlier in the week threatened to attack oil infrastructure if the regime did not stop the bloodshed, now occupies a number of the fields in its heartland south of Benghazi. African Energy reports that this includes the major Arabian Gulf Oil Co. fields of Sarir, Messla and Nafoora-Augila. Capacity from all the fields in this region is thought to be over 1 million b/d—around two-thirds of Libya’s output—in the hands of the NOC and Western operators. This crude is transported by pipeline to the Marsa al-Harigh terminal in the far east of the country, now in “opposition” hands, with some also running to Ras Lanuf and the 220,000-b/d refinery and export facility there.
A few days ago, a workers’ committee was reported to have been formed at Ras Lanuf, protesting against the Gaddafi regime, but also protecting the facility, in a pattern that has also been reported at other facilities. It is also now understood to be outside government control.
Workers in the Sirte region have reportedly, however, come “under pressure” to halt production at oilfields in order to deny the Gaddafi regime any revenues. A number of Western oil companies have already drawn down operations and withdrawn workers, although Marathon, with a stake in the Oasis (Waha) Group, has said that their Sirte operations are unaffected, which in theory accounts for nearly 350,000 b/d of Libyan output, as has Occidental, which has a stake in some fields in that area.
A mechanical engineer at the Sirte Oil Company did state that the call for a “blockade” had affected some production, according to a Guardian report, although this could not be confirmed at the time of writing by local media sources. That followed a reported strike at the (relatively) nearby Nafoora field earlier in the week.
Status of production facilities in the west is unsure
The status of the country’s production facilities in the west, including areas around Murzuq, where European companies like Repsol and Eni are present, and further north in gas-rich Ghadames is less clear, with Gaddafi still reported to be entrenched in the capital, Tripoli and fighting between “opposition” and Gaddafi loyalists reported to be taking place in Zawiya on the coast. This is the location of the export terminal for production from a number of the Murzuq fields. Eni reported earlier in the week that it had stopped operations at the 8-9-bcm Greenstream gas export pipeline, which runs from the more westerly port of Mellitah and takes gas from Wafa in Ghadames and the offshore Bahr Essalam, with some oil production also affected.
Eni’s chairman, Paolo Scaroni yesterday (24 February) estimated the total loss of Libyan production capacity at around 1.2 million b/d, although Eni has stated that some of its production continues, as have Total and Occidental.
The near-term outlook is for a near complete drop-off in Libyan oil production, not just because of actions upstream in the mostly remote oil and gas fields, but also because of bottlenecks and problems en route to market, including the issues at ports, not to mention the “blockade” reported in the east to deprive Gaddafi of revenues. This is compounded in the western regions by ongoing bloodshed, violence and the savage defence of an apparently dying regime by Gaddafi loyalists, with Gaddafi himself also making threats, if not as yet understood to have followed through with them, to sabotage oil infrastructure.
Majority of oil exports in Libya are offline
Estimates on the scale of the Libyan outage vary at between 800,000 and some 1.2 million b/d, although IHS World Markets Energy still believes that a strong likelihood remains that most of the country’s 1.3 million-b/d oil exports will go, or are already, offline. Some day-to-day sporadic cargoes may depart from export terminals depending on whether vessels are able to dock, and whether oil is available in tanks and workers are available. Saudi Arabia has offered to step into the breach to make up Libyan supplies, in a development covered elsewhere.
As the “liberation” of the Sirte Basin areas and port cities in the east demonstrates, however, there remains a possibility that some production could technically be brought back online in relatively short order if lines of control are re-established. It is the legal and political angles, rather than technical issues, that remain the real hurdles ahead, with no clear alternative to Gaddafi, particularly if his government and senior government officials are unable to scramble together an alternative.
Signs of positioning for influence around the country’s key oil facilities are therefore expected to increase in the coming days as attention turns to the “what next”, with real uncertainty remaining over whether existing contract arrangements will stand in the likely event of the removal of Gaddafi’s regime.