Libya Says Its Oil Recovery Is Struggling And OPEC Sympathizes - BLOOMBERG
BY Grant Smith
(Bloomberg) -- Libya said it’s struggling to restore oil production and fellow OPEC members are sparing the nation from having to participate in their deal to cut output.
The North African nation has revived output to almost 1 million barrels a day, but it’s “very difficult’’ to say when that could increase to 1.25 million a day, said Mustafa Sanalla, chairman of the National Oil Corp. That’s a production target Libya gave to fellow producers at a meeting in July.
“We’re still suffering from the lack of budget,’’ Sanalla told reporters in London after two days of meetings with diplomats and oil companies. Libya has explained its challenges to OPEC, which “understands the situation very well,’’ he said.
The Organization of Petroleum Exporting Countries and Russia are leading a global coalition of oil producers in supply cuts aimed at clearing a world glut. The accord spared two OPEC members, Libya and Nigeria, while they tackled domestic crises that have hobbled their oil industries.
A recovery in the output of both nations prompted speculation they may be asked to join the agreement by restraining their output. Nigeria said it has now effectively capped its production, but no ceiling has been applied to Libya. At a meeting last month OPEC and its allies said they welcomed further recovery in both countries. Sanalla said he hopes to attend the next formal meeting of OPEC and its partners, scheduled for Nov. 30 in Vienna.
While Libya has resolved some internal disputes and restored output from a low of 550,000 barrels a day in April, the country still faces major challenges. The state-run oil company is only receiving about 25 percent of its investment budget and production could decline without the needed money, Sanalla said.
Production has dropped by as much as 90,000 barrels on a single day because of insufficient funding for maintenance, Sanalla said. The nation lost more than 6 million barrels of potential output between July and September. Returning to full capacity of 1.6 million barrels a day “will take some time,’’ he said.
Twelve of the 19 storage tanks at the Es Sider export terminal are inoperative, and half of the 13 tanks at Ras Lanuf are out of action, he said.
The NOC held meetings this week in the U.K. with a number of stakeholders in Libya’s oil industry, from local tribes to international oil companies such as Eni SpA and Total SA. The meeting reached a “statement of principles’’ that will be passed to the conference on Libya’s political future to be chaired by the United Nations.
The principles include the resolution that NOC has a monopoly on the exploration, production, transport and export of oil and gas, and that all of the state-run company’s revenues will be sent to the Central Bank of Libya.