NOC focuses on pipeline repairs as leaks hit oil output

Repairing damaged assets remains a priority for Libya's state-owned oil firm NOC after pipeline leaks led to crude output losses in recent weeks.

NOC chairman Mustafa Sanalla told the Libya Investment Forum that the company's Akakus Oil subsidiary, which operates the 300,000 b/d El Sharara field, had lost around 50,000 b/d over the last couple of weeks because of pipeline leaks. "Also for [NOC subsidairy] Waha [Oil], we lost some production yesterday and the day before, also for rehabilitation of the pipeline," he said.

Shipping sources say leaks have reduced Waha Oil's output to 130,000 b/d, compared with typical levels near 300,000 b/d, although regular pipeline flows are expected to resume shortly. Waha Oil's production feeds into Libya's flagship crude stream Es Sider.

Some of Libya's pipelines and other oil infrastructure were damaged during extensive shutdowns last year, including a long-running port and field blockade that severely curtailed crude production and exports. NOC was prevented from carrying out critical maintenance during these outages.

The need to rehabilitate infrastructure is urgent, but NOC has to contend with a lack of funding and a reluctance among engineering and construction contractors to return to sites because of Libya's fragile political situation, Sanalla said. Even so, the firm is sticking to its "ambitious plan to increase [oil] production to 2.1mn b/d and gas production to 4.1bn ft³/d, both onshore and offshore," he said, without giving a timeline.

The company has said previously that it aims to increase oil output to 1.5mn b/d by the end of this year and to 2.1mn b/d within 3-4 years. Argus estimates Libyan crude production stood at 1.12mn b/d in May. Among the potential sources of output growth are five fields damaged by Islamist group Isis in 2015, Sanalla said. Concessions in areas such as north Hamada and north Gialo could also be developed, he added.

Parallel to its output growth plans, NOC is seeking to press ahead with efforts to reduce emissions and gas flaring at its operations, including gas utilisation at the Sarir and Mesla fields. NOC is also aiming to inject over 10,000 b/d of "liquids" into the El Sharara field's stream, Sanalla said. Traders said it will likely be condensate to regulate the quality of the stream.

London calling

NOC is in the process of expanding its international trading presence, with plans to open a London office soon. "Hopefully the second half of this month, we are going to make the [inauguration] ceremony," Sanalla said.

NOC opened its first international office in Houston, Texas, in May 2019 — a decision that surprised traders at the time, given that the majority of Libyan crude is exported closer to home in the northwest European and Mediterranean markets. The location of NOC's offices is important because the country's unpredictable security conditions often prevent representatives of international oil companies from entering Libya.

By Ruxandra Iordache