Libyan oil faces security and political hurdles

Some of the security concerns are directly tied to the oil infrastructure. For instance, Gulf of Sirte, an area that accounts for about two-thirds of Libyan oil production, saw the heaviest fighting and the most damage and is likely to face continuing security concerns. In terms of security, press reports suggest that the oil terminals and surrounding infrastructure of Ras Lanuf and Brega have been booby trapped with explosive devices. The Financial Times cited land mine experts as saying it could take 18 months to clear some of the explosives — an issue that will need to be addressed before the known damage can be fully repaired. Resuming production will bring with it its own security concerns as the infrastructure is a relatively easy target. During the conflict, oil production out of the East was sporadic at times because when production resumed, it became a target for loyalist forces.

And finally, the damage itself. The Libyan oil industry is divided up into nine separate streams, each with its own transport and export infrastructure. Geographically, it can be divided into three sections, Eastern, Central and Western. The reported status of infrastructure is summarized below; exports by terminal are estimated based on Lloyd's List Intelligence APEX database and other press reports.

Most of Libya's oil production is located around the Gulf of Sirte, in the central part of the country, where it was damaged by the fighting. This region has four terminals, Es Sider, Brega, Ras Lanuf, and Zueitina. Es Sider, the largest of the terminals, came under direct attack during the fighting and there were reports of damage to at least its storage tanks, metering equipment, and a feeder pipeline. Prior to the fighting, this terminal exported close to 350,000 bbl/d from the Waha concession, a partnership between the Libyan National Oil Corporation (LNOC) and three U.S. companies: Hess, ConocoPhillips, and Marathon.

The terminals of Brega and Ras Lanuf, which combined exported over 300,000 bbl/d in 2010, were severely affected by the fighting. Ras Lanuf is reported to have damage to its power supply and, more significantly, these facilities are believed to have been booby trapped with explosive devices laid in and around the oil infrastructure. The Zueitina terminal on the central eastern part of the Gulf of Sirte accounted for close to 150,000 bbl/d of exports in 2010; this terminal is fed by the Attifel and Zueitina streams and there were reports of explosions near the terminal.

The Eastern infrastructure consists of two main fields, Messla and Sarir, oil from which is exported via pipeline to the Tobruk (Hariga) terminal in the east. This stream is entirely under the operation of the Benghazi-based Arab Gulf Oil company (AGOCO), which sided with the rebels early in the conflict and maintained minimal production during the fighting. AGOCO was even able to export two shipments of approximately 500,000 bbl during the conflict, but production and exports did not reach the pre-conflict rate of around 250,000 to 300,000 bbl/d. However, production out of this area made it a target for loyalist forces and there were reports of damage in and around Messla field, including some power infrastructure.

Other production that was maintained during the conflict was that from the southwest fields that fed into the Zawiyah refinery where it was processed for domestic consumption in Gaddafi-held areas near Tripoli. Production at the refinery (which has a reported capacity of 120,000 bbl/d) was maintained until it was shut-in in early August as a result of rebel sabotage to the pipeline connecting the refinery. This affected both fuel supplies and electricity generation in the region. Oil production for the Zawiyah export terminal is the Sharara blend that originates in the Murzuq basin. Exports in 2010 were estimated to be close to 200,000 bbl/d while overall production was estimated as high as 320,000 bbl/d. The second western stream is Mellitah, but there is little information available about the current status of the field. Exports in 2010 were estimated to be around 150,000 bbl/d, also coming from the Murzuk basin and including the El-Feel (Elephant) fields.

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