Libya’s oil production is set to reach the lowest levels since Gaddafi’s overthrow in 2011, according to the National Oil Corporation – the NOC. As the two sides travelled to Berlin almost a week ago for the first serious cease fire and peace talks, tribal elements backing Haftar forced a shutdown of production facilities and have caused power blackouts in parts of the country.
NOC Chair Mustaffa Sanalla told The Financial Times that output had already dropped from pre-Gaddafi levels of 1.3 million barrels per day (bpd) to around 400,000 bpd since Haftar’s offensive. Since the blockade Friday, that production is expected to plummet to a mere 72,000 bpd “within days” or even weeks”, according to the Financial Times.
According to Turkish media reports, this has led to a loss of over $255 million in just the first six days since the facilities were closed, an average daily loss of nearly $43 million.
Haftar’s LNA already controlled most of Libya’s key oil terminals, and prior to the Berlin conference, shut down most of Libya’s crude exports, a key source of government income, in order to increase pressure on the GNA to end its new cooperation agreements with Ankara, and remind world powers that he and not the GNA controls the majority of Libya’s infrastructure and resources.
According to Sanalla, the loss of gas production, which is a byproduct of the crude oil extraction process, has affected the flow of gas to power stations, causing nation-wide shortages. It has also affected petrochemical production, which also makes use of natural gas, to allow the diversion of gas to the power stations.
Sanalla noted that most of Libya’s energy reserves are onshore and the country has limited storage capacity, with no export routes. He further warned that the reduced production will severely deplete Libya’s cash reserves.
The interruption to oil flow could disrupt Sanalla’s plans to raise Libya’s oil output to 1.5 million bpd within the year and to 2.5 million bpd over the next decade. Such incidences, and the ensuing chaos also discourage protentional foreign investors, crucial to grow and update the sector.