Libyan oil supply outages intensify as political crisis deepens

Libya's oil sector has been hit by more supply disruptions due to closures of the 200,000 b/d Sarir field and the 250,000 b/d Es Sider terminal as protestors blockaded those sites, industry sources told S&P Global Commodity Insights June 10.

More than half of Libya's oil production is now offline as tensions between the two rival governments have escalated in recent weeks, with both jostling for power and oil revenues.

The Es Sider terminal was closed as of the morning of June 10 after protests began the previous day, sources said. The 200,000 b/d Sarir field, which is connected to the 250,000 b/d Marsa el-Hariga terminal, was also confirmed closed.

Sources expected protestors to target the Marsa el-Hariga terminal next.

The self-styled Libyan National Army, which supports the east-based Government of National Stability, has backed these protests. The LNA, led by Khalifa Haftar, controls most of Libya's oil and gas infrastructure but does not control sales and distribution of revenue.

These protests have also spread to the 200,000 b/d Ras Lanuf Port, sources added.

"Protesters entered Es Sider and Ras Lanuf, issuing threats to restrict operations. A tanker at Ras Lanuf tanker was allowed to load and leave. Es Sider is now confirmed closed," a source told S&P Global Commodity Insights. "Protesters seem to identify as 'oil crescent' locals, which underlines LNA involvement."

A spokesperson at state-owned National Oil Corporation was unavailable for comment.

Operations at Libya's largest oil field Sharara are being hampered by technical and security issues, industry sources said June 8.

Political crisis

Crude exports from the 90,000 b/d Brega, 90,000 b/d Zueitina, and 70,000 b/d Mellitah terminals remained closed as tensions between Libya's two rival governments intensify.

Libya's crude production has remained much below its current capacity of 1.2 million b/d in recent months. The North African country saw its output slump to a 16-month low of 770,000 b/d in May, according to the latest Platts OPEC+ survey from S&P Global.

Relations between the Tripoli-based Government of National Unity and GNS have worsened in recent months.

GNU Prime Minister Abdul Hamid Dbeibah has refused to cede power to GNS Prime Minister Fathi Bashagha. In mid-May, Bashagha failed to take control of the country's capital.

Analysts at S&P Global said there is "likelihood of larger and more sustained disruptions" due to the "intractable standoff" between the two rival governments.

"The next flashpoint could be the June 21 expiration of a UN road map, which is likely causing Haftar and his political allies to raise pressure in an effort to push out interim PM Dbeibah," they said in a recent note.

The country's oil industry has been at the mercy of groups vying for the control of valuable assets since the 2011 civil war, with armed attacks on key pipelines and production facilities.

Libya holds Africa's largest proven reserves of oil and its main light-sweet Sharara and Es Sider export crudes yield a large amount of middle distillates and gasoline, making it popular with refineries in the Mediterranean region and Northwest Europe.