Libya’s oil output could be days from coming to a complete halt as conflict in the OPEC nation puts the country’s most vital industry at risk, the nation’s top oil official said.
The country is currently pumping 262,000 barrels a day and could fall as low as 72,000 barrels within days, National Oil Corp. Chairman Mustafa Sanalla told Bloomberg Television in an interview. “The loss of Libyan oil production will have a bad effect on the price.”
Eastern-based general Khalifa Haftar, the military leader whose Libyan National Army controls the oil-rich east and south of the country, in April launched an offensive to take the capital Tripoli, which has killed more than 2,000 people and displaced tens of thousands, just as the United Nations was laying the ground for a political conference to unite the country.
The crisis escalated earlier this month, crippling oil production, closing export terminals and forcing the NOC to declare force majeure on supplies, which can allow Libya -- home to Africa’s largest-proven oil reserves -- to legally suspend delivery contracts.
The closure of oil ports resulted in losses totaling $318 million, the NOC has said and cutting the nation’s production from 1.2 million barrels a day before the halt. That was the highest level in six years but still well below its output before the civil war that overthrew dictator Muammar Gaddafi in 2011. The country has no storage capacity currently, Sanalla said.
Libya has since been divided into rival camps in Tripoli and the east, each with its own set of governing institutions. The country has endured major disruptions to its output and exports as battles and blockades among rival armed groups and militias hindered efforts to revive production.
As a result of the blockade the NOC has been told it won’t receive the budget it requested for an “ambitious program to expand oil production,” Sanalla said in a statement Monday.
“Acting illegally by blocking Libyan oil production will just lead to the further impoverishment of the Libyan state and erosion of the rule of law,” he said. Discussions are taking place on lifting the blockade, he added in the interview.
The country is targeting long-term production of 2.1 million barrels a day by 2024.