Abu Dhabi: Oil output from Libya is not expected to go up significantly despite assurances from National Oil Corporation that it would be working with the Unity government of the divided North African country to increase exports.
Edward Bell, a commodity analyst at Emirates NBD, said the political situation in the country is not stable enough to boost oil production enough for exports.
“There are still problems in the country with political differences persisting between different factions. I don’t think oil exports are going to increase in the near future that would affect oil markets that are already oversupplied,” Bell told Gulf News.
The current oil production in Libya is about 300,000 barrels per day, down from 1.6 million barrels per day in 2011 when the country was in a stable condition and there was no civil war.
According to him, the oil infrastructure in the country is in a bad shape due to damage done by terrorist groups and needs repair. “It will take quite a while before we could really see Libya going anywhere close to what it was producing before the civil war.”
In a statement on its website, Chairman of Libya’s National Oil Corporation (NOC) said last week that they would be working with the Unity government to restart exports from the ports that were closed and from the fields that supply them.
“We need to be clear there are still big military, political and legal obstacles that must be resolved. NOC will immediately start technical works, and we will mobilise workers as quickly as possible,” he said in the statement.
The company will also try to boost production to 900,000 barrels per day by the end of the year. “In the spirit of national unity, we urge the tribes and the municipalities in the oil-producing areas all over Libya to cooperate and join our commitment to let Libya’s oil flow freely.”
Geoff D. Porter, president of the US-based North Africa Risk Consulting, said through an email that Libya is unlikely to restore production to pre-revolution levels until 2019.
“If oil production increases significantly [300,000 barrels per day] there will be slight downward pressure on crude prices, but the impact will be more perceptual than actual. There is so much over supply in the market already that any Libyan increase will have a marginal, short-term impact,” he said.
Brent, the global benchmark, ended at $44.27 on Friday with the US crude, West Texas Intermediate at $41.80 per barrel.
“The overall rebalancing story is going to remain intact even though we’ve seen quite a bit of overall volatility in the last few weeks,” said Bell.
In the third quarter, Brent would average around $45 per barrel and in the fourth quarter it would be about $50 per barrel, he added.
