(Author: Libyan Gazette Editorial Staff)
The Organization of the Petroleum Exporting Countries (OPEC) is allowing Libya to nearly double its crude oil export despite a deal being developed to cut production to manage the oversupply of crude oil.
According in Mustafa Sanalla, the chairman of the National Oil Corporation (NOC) Libya is currently producing 600,000 barrels of oil per day and has Africa’s largest crude oil reserves. Sanalla said the aim is to raise oil production to 900,000 barrels per day by the end of the year and next year aim for 1.1 million barrels of oil per day.
The last time Libya’s oil industry was operating at full capacity was five years ago, and only recently was the NOC able to reopen the country’s major oil ports to resume oil production and exports.
According to the NOC’s chair, Libya is making its way ”toward economic revival” however, ongoing clashes continue to put oil facilities at risk of being attacked again.
Before the 2011 uprising, Libya was producing around 1.6 million barrels per day. However, as the violence in the oil rich country escalated, oil fields and ports were shut down as vying militia groups attempted to take possession of the country’s main source of revenue.
The escalating violence put the oil fields and ports under force majeure, which legally prevents a group from being held liable when the situation is out of their hands.
Force majeure for Zueitina oil port, along with Es Sider and Ras Lanuf oil ports, was lifted by the NOC on September 14 when a deal was agreed upon by the state oil company and Haftar, who forcefully took possession of the oil facilities.
With Libya’s return to the oil market, crude oil supply has been exceeding demand resulting in reduced prices. In June 2014, brent crude oil which used to cost $115 per barrel is now priced at only $47 per barrel.
The deal to cap oil production excludes Libya, Nigeria and Iran, which means the more the exempt countries produce the more pressure there will be on the other countries to cut back oil production.
On November 30, OPEC will meet in Vienna to review proposals related to the reduction in oil supply.