Ceasefire opens up opportunities for Libyan oil
On 11 October, the National Oil Corporation (NOC) announced that it had told Akakus Oil Operations to restart operations at Sharara oil field. The NOC said in a statement that it had reached an ‘honour agreement’ with the Petroleum Facilities Guard (PFG) units at Sharara under which the PFG would cooperate in ensuring ‘no security breaches’ occurred at the field. The field will reportedly start pumping at 40,000 barrels of crude per day (bpd) and within 10 days could possibly reach its capacity of 300,000 bpd.
If Sharara reaches capacity roughly to schedule, it will essentially double Libya’s current overall output to around 600,000 bpd. Resumption of production at Sharara is also likely to lead to the resumption of production at the nearby al-Feel field, as electricity can be generated from production at Sharara to get al-Feel online. Therefore, successfully ramping up Sharara could lead to momentum for the Libyan oil sector and show that NOC Chairman Mustafa Sanallah is capitalizing on Russian and Emirati willingness to make accommodations and remove PMCs and diplomatic obstacles to get production back online. Overall, the momentum witnessed so far in the resumption of Libyan oil production is slightly promising if tenuous. If the security situation at Sharara remains stable, it could prompt the NOC to re-open other important facilities and terminals such as Ras Lanuf and Sidra. However, this depends on whether Wagner PMCs will stand down.