Production from Libya's biggest oil field, the 300,000 b/d El Sharara development, has been disrupted by protesters following the arrest of a key politician in Tripoli, a source close to the matter told Argus.
"Not all of it has been shut down. Only a few wells. I expect production to be back shortly," the source added, without putting a figure on current production.
El Sharara is spread over Blocks NC-186 and NC-115 in the southwest of the country and is operated by the Akakus Oil Operations, a joint venture between Spain's Repsol, TotalEnergies, Austria's OMV, Norway's Equinor and Libya's state-owned NOC.
The disruption at El Sharara comes after the nearby 70,000 b/d El Feel field was shut down by protesters on 13 July. With a combined capacity of around 370,000 b/d, El Sharara and El Feel account for almost a third of the country's crude production capacity of 1.2mn b/d. Libya produced 1.18mn b/d in June, according to Argus estimates.
Declining production from Libya, which accounts for just over 1pc of global oil demand, risks exacerbating an expected supply deficit in the second half of this year. Both El Sharara and El Feel have been frequently shut down for political purposes over the past decade. The latest shutdowns are being led by a group unhappy with the arrest of former finance minister Faraj Boumtari at an airport in Tripoli on 12 July. Boumtari had been seen as a potential replacement for Libya's central bank governor Sadiq al-Kabir who has ultimate control of the country's oil revenues.
Referring to Boumtari's arrest and reports that other politicians have been banned from travelling at the same airport, the UN's mission in Libya, UNSMIL, said: "These acts create a climate of fear, promote tensions between communities and tribes, and have serious implications for the unification of national institutions." The shutdown of oil fields "must be immediately ended", it added.
Row over revenues
The latest shutdowns come against the backdrop of an already tense political atmosphere which has seen factions based in the east of the country threaten to stop crude production and exports unless a "fair" oil revenue distribution mechanism is implemented. Eastern-based military commander Khalifa Haftar, who has orchestrated several oil blockades including one last year, threatened to use force unless such a mechanism was put in place by the end of August.
Libya is politically divided between an internationally recognised administration in the west, which has control over oil revenues, and a rival administration in the east, which is home to around three quarters of the country's oil production capacity. Haftar holds considerable sway in the area were El Sharara and El Feel are located. "This wouldn't have happened without him at least turning a blind eye," a source told Argus. "He's putting pressure on Dbeibeh."
Abdelhamid Dbeibeh is the prime minister of the Tripoli-based and internationally recognised government which, alongside central bank governor Kabir, decides how oil revenues are spent. The rival government in the east, supported by Haftar, wants this arrangement to end. Control over oil revenues lies at the heart of Libya's inability to escape the chaotic political transition that began with the overthrow of Muammar Gaddafi in 2011.
