Libya's Sharara and El-Feel oil fields shut by protesters: sources

Libya's Sharara oil field, the country's largest, and nearby El-Feel have been shut down by protesters from the southern Ubari region amid anger over high fuel prices and a lack of economic opportunity, sources said Jan. 3.

Protests at the main field, which were entering their third day, initially prompted workers at Sharara to shut some wells before the 300,000 b/d field was taken completely offline.

One source said that, while the export pipeline to Zawiya was closed, Sharara -- operated by a joint venture between Libya's National Oil Corp. and Equinor, OMV, Repsol and TotalEnergies -- was continuing to pump to fill its storage tanks before it had to stop.

On the evening of Jan. 3, sources said the 70,000 b/d El-Feel field had also shut, as the protests engulfed southern Libya's oil fields. It was not clear whether the field was totally or partially closed, and whether pumping had stopped.

Al-Ahrar, a local TV station, reported that state-owned NOC had confirmed a partial closure at Sharara and quoted the head of the protest group, Fezzan Gathering Association, demanding better services and development in southern Libya.

Abu Bakr Abu Shreya, spokesperson for the Fezzan Gathering Association, said the field would not reopen until their demands wer e met, Al-Ahrar said. Some of the demands are provision of sufficient fuel supplies, the creation of a southern refinery, improvements to roads, job opportunities and health provision.

Fuel prices in southern Libya have skyrocketed in recent months, sources said.

A liter of fuel was said to be selling for 7-9 Libyan dinar ($1.46-$1.88) in the restive region, compared with 0.5 dinar in Tripoli. Cooking gas is also four times as expensive.

Front-month ICE Brent futures have risen around $2/b on the news and remained at $78.08/b as of 1548 GMT, up 2.8% from the previous close.

However, traders told S&P Global Commodity Insights that NOC officials have indicated that they expect the outage to be short-lived, which would limit the wider market impact.

NOC did not respond to a request for comment from S&P Global.

The onshore Sharara field -- once thought to contain Africa's largest proven oil reserves -- has been a frequent target for protesters and armed groups since the fall of Moammar Qadhafi in 2011. The field sits in Libyan oil block NC-115.

The last disruption was in July with demonstrations following the abduction of Faraj Mumatari, a former finance minister.

Rival governments

Libya's crude production rose to 1.12 million b/d in November 2023, according to the monthly Platts OPEC Survey from S&P Global, amid a period of relative stability. Libya, which is ruled by rival administrations in the east and west, is a member of the OPEC.

Libya's government of national unity, which controls the west and is backed by the UN, is aiming to steer output to 2 million b/d by 2030, according to oil minister Mohamed Oun.

However, General Khalifa Haftar, who controls the oil-rich east and commands the Libyan National Army (LNA), has in the past threatened to use force to implement a "fair" distribution of oil wealth in Libya, and orchestrated a blockade on fields and ports in the summer of 2022, prompting NOC to declare force majeure for exports.

The blockade was ultimately lifted last July following the appointment of Farhat Bengdara as NOC chair but pushed crude production to a two-year low of 650,000 b/d in June, according to the Platts output survey.

A security source told S&P Global the Sharara shutdown was caused by "local grievances" rather than any LNA involvement, adding: "Protesters do not represent a major threat."

Catherine Hunter, an S&P Global Libya analyst, said the country was ranked among the riskiest in the world for the ability of civil society to disrupt operations, "although improvements in oil revenues and flows over the last couple of years have helped to mitigate the risk to an extent."

Sharara is a light, sweet grade, with a sulfur content of 0.8% and an API gravity of 42.6, according to the Platts Periodic Table of Oil, by S&P Global.