Crude oil production at Libya’s largest oilfield, Sharara, has slumped over the past day after an armed military group closed a valve on the pipeline that carries crude oil from the field to the Zawiya port for exports, in yet another global supply scare amid ongoing disruptions in the Middle East.
An armed group has closed Valve n.7 on the pipeline, Libya’s National Oil Corporation (NOC) said, adding that the closure caused a pressure buildup within the crude oil pipeline, leading to a significant reduction in production at the Sharara field.
The field is operated by Akakus Oil Operations, and its production is being shipped through the pipeline to the Zawiya port for exports.
The Libyan state oil firm warned that “the continued closure of Valve No. 7 will inevitably halt production, transportation, and export operations at the Sharara field.”
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If the shutdown continues, NOC said it may be compelled to declare force majeure on Sharara output and exports.
“This would directly harm the national economy by reducing state revenues, especially given rising global oil prices, and would expose the oil transport system and its facilities to technical and operational risks,” NOC said.
The Sharara oilfield is estimated to have produced about 340,000 barrels per day (bpd) of crude oil before the incident.
Following the closure of the valve and the forced reduction of production, crude output at Sharara has now slumped to about 120,000 bpd, according to various estimates.
Libya’s fresh supply scare comes amid squeezed global oil supply as shipments through the Strait of Hormuz remain uneven and uncertain, and the Yanbu exports out of Saudi Arabia’s Red Sea coast are still offline, following the drone attack on the East-West pipeline on September 10.
Oil prices rose in Asian trade on Tuesday, following two days of declines, as the market weighs diplomacy hopes against supply-side risks.
By Tsvetana Paraskova for Oilprice.com
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