How Much Is Libya Losing In Oil Field Shutdowns By Armed Groups?

Following mounting sanctions against Russia’s oil, the West has struggled with little success to contain a likely oil supply crisis, despite the surge in Brent crude price to over $109 a barrel.

At the moment, the West is reliant on the boost in crude production and supply from OPEC and their allies as agreed in a recent deal, but this too might seem unlikely as member states, especially in Africa, are unable to meet up with the output targets.

A Bloomberg survey showed that countries like Libya and Nigeria had the lowest OPEC outputs despite being among the largest oil-producing states on the continent. While Nigeria’s shortages in production could be blamed on insufficient investments in the sector, Libya’s poor output is due to a prolonged internal conflict that is politically triggered.

Since March, the Sharara and El Feel, Libya’s largest oil fields, have been shut down by reported armed militia, causing the country’s daily oil production output to drop from 1.2million barrels a day to 920,000 barrels in the same month. The North African country’s production has now dropped by about 600,000 barrels a day, according to the Minister of Oil and Gas Mohammed Aoun.

The State-controlled National Oil Corp. also shut down the ports of Zawiya and Mellitah Zawiya and Mellitah and the eastern terminals of Ras Lanuf, Brega, Zuetina and Es Sider – a move that was heavily criticized by Aoun.

With global oil prices still very high, the minister for oil and gas calculated losses to be at 60 million dollars per day, at an average price of $100 per barrel.

Visualizing Libya’s Oil Network

With the closure of major terminals and fields that make up Libya’s oil supply network, analysts have argued that the shutdown of oil fields by demonstrators and armed groups might be orchestrated by Russian allies in the country, and here is why.

The oil terminal closures follow the selection of a new prime minister, Fathi Bashagha, by Libya’s eastern-based parliament in a direct challenge to Tripoli-based interim Prime Minister Abdulhamid Dbeibah.

Analysts have said eastern Libyan forces backing Bashagha are responsible for the closures of the oil facilities in a bid to press Dbeibah to step down, but the incumbent has insisted he will only hand power to an elected successor.

It is important to know that Russia is the “principal patron” of Gen. Khalifa Haftar, who tried to seize power in Tripoli in 2019 with the aid of Russian mercenaries.

While there is no evidence to indicate that Moscow is playing an active role in the closures, analysts argue that the closures work in Moscow’s favour, by further tightening the market and keeping prices elevated, as western leaders continue to struggle with prices and supply shortages.

Patsy Nwogu

Reporting on data-driven featured stories and investigations.

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