Libya's Sharara, Hamada oil fields and Zawiya terminal shut due to PFG blockade

Libya's key southwestern oil fields of Sharara and Hamada, and the 300,000 b/d Zawiya oil terminal, have been shut down after a blockade by a unit of the Petroleum Facilities Guards, sources close to the matter said Dec. 20.

An armed group affiliated with the PFG has closed the oil fields and the pipeline, which connects into the Zawiya oil terminal, due to a dispute with state-owned National Oil Corp.

Sources said a unit within the western division of the PFG has been unhappy with the recent reshuffle of senior management at Akakus Oil Operations.

NOC subsidiary Akakus Oil Operations operates the 300,000 b/d Sharara field, which was producing 265,000 b/d before the closure, according to sources.

The pipeline between Sharara and the Zawiya terminal goes via the Hamada field, which is why operations at the smaller 10,000 b/d field have also been affected.

A representative at state-owned NOC wasn't immediately available to comment on the matter.

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

Elections unlikely

Libyan terminal shutdowns can be frequent and vary widely in size and duration.

But with Libyan presidential elections scheduled for Dec. 24 still in doubt, output from the country is expected to be volatile in the coming weeks.

S&P Global Platts Analytics expects a delay to the elections due to difficulty registering candidates, and has flagged an election-related flareup to be a top oil market risk for 2022.

"Eastern general Khalifa Haftar's reaction to a loss (or a win that goes unrecognized) is the most identifiable threat to oil production, but a loss of domestic popularity and international support after shutting over 1 million b/d for most of 2020 makes a similar move unlikely," it said in a recent note. "But conditions in Libya often deteriorate quickly, so our forecast for 1.10 million b/d in 2022, 100,000 b/d below capacity, carries significant downside risk."

The OPEC member has also been facing issues arising from its exhausted infrastructure and a lack of funds.

Libya's crude production has been averaging 1.12 million-1.16 million b/d in the past three months, according to the S&P Global Platts monthly OPEC+ survey.

The bulk of Libya's aging infrastructure has been wrecked by the civil war, militant and terrorist attacks, along with neglect over the last decade.