Libya's state-owned NOC said it expects the country's oil production to reach 260,000 b/d next week as onshore fields that have been shut in for several months gradually resume operations.
NOC subsidiaries Sirte Oil, Agoco and Mellitah Oil and Gas began restarting some of their fields in the last few days, after a deal was struck last week between Khalifa Haftar's Libyan National Army (LNA) and the rival UN-backed Government of National Accord (GNA). NOC also removed force majeure restrictions from the Zueitina terminal today and instructed Zueitina Oil to resume production that feeds the port. The Zueitina terminal typically ships out Bu Attifel crude and volumes of the smaller Zueitina grade.
Port and field blockades imposed by LNA allies have severely constrained Libyan oil production and exports since January, with the offshore Bouri and Al Jurf fields the country's only consistent source of crude supplies during that time. Argus estimates that Libyan crude output was just 90,000 b/d last month. It is not clear if NOC's 260,000 b/d figure includes condensate production from the onshore Wafa field, which has continued to flow since January and which NOC has sometimes put in previous production tallies. Further increases in Libyan output could be stifled by continuing political disputes, security concerns and the spread of Covid-19.
In terms of exports, NOC said it intends to resume activity at the Marsa el-Hariga and Marsa el-Brega ports in eastern Libya as a first step. The company, which ended eight months of intermittent force majeure restrictions at "secure" ports on 19 September, said it hopes to resume activity at all of its ports in the second phase of the restart, although it has previously warned about dangers to staff and the risks of stored flammable supplies at the Ras Lanuf and Es Sider ports, where Russian paramilitary group Wagner and Sudanese Janjaweed forces remain. Both factions are affiliated with the LNA.
NOC said it will ship stored crude to terminal tanks within the next few days. Shipping sources indicate that Ras Lanuf has roughly 1.4mn bl of crude in tanks, while Zueitina has 5,000 bl on site and Es Sider has 2,000 bl. Some stored crude and condensate was exported from Marsa el-Brega earlier this month. The LNA agreed to permit the shipments in order to free up storage and allow NOC to maintain associated gas production to alleviate nationwide power outages. Meanwhile, the Unipec-chartered Marlin Shikoku is due to export the first crude cargo from Marsa el-Hariga since January on 24-27 September.
Watching and waiting
A full-scale recovery in Libyan production would present a challenge for the Opec+ coalition, which is five months into a two-year output restraint deal. Opec+ delegates say Libya's production revival is not yet a concern but the country's progress will be followed "very closely" to guide output policy decisions. Libya, along with Iran and Venezuela, is exempt from output cuts under the current deal. The north African country has historically been quick to boost production once security conditions allow, but previous attempts to revive output in June and July were short-lived.
Libyan production is likely to make its way onto the agenda when the Opec+ group's Joint Technical Committee (JTC) and Joint Monitoring Ministerial Committee (JMMC) meet on 15 and 19 October, respectively. One delegate said that Opec+ deal participants might struggle to accommodate further cuts to "make way" for Libya to regain the market share it has lost this year but that a slight increase in demand could absorb some of Libya's output growth as the impact of Covid-19 tapers.
