Libya’s oil production has risen by over 50,000 barrels per day (bpd) to 885,000 bpd, after the state oil company settled a dispute with German E&P major Wintershall that had slashed production by some 160,000 bpd, according to a Reuters report.
Last week, the National Oil Corp said it expected Libya’s production to recover to 900,000 bpd in the short term.
The NOC and Wintershall reached an interim agreement last week on an upstream contract dispute that began earlier this year.
The dispute prompted Wintershall to shut down production at its NC 96 and NC 97 concessions in the Sirte basin, around 1,000km southeast of the capital Tripoli.
The dispute also led to a shutdown at other oilfields including Eni’s Abu Attifel, which shares processing facilities with Wintershall.
“Through Wintershall facilities we can pump the production of other producers like Eni and other operators,” a local source told Reuters.
Abu Attifel, which resumed production on June 14th, can pump 50,000-60,000 bpd, NOC says.
Wintershall’s presence in the MENA region dates decades back to 1958, when it drilled its first oil in Libya.
By virtue of that fact, although Wintershall’s team today boasts of tens of engineers and specialists from Libya, the steady deterioration of the security situation in the North African country since the Arab Spring of 2011 and the current fierce infighting between rival factions, has compelled Wintershall to contract its operations there to a negligible level.
In Libya, after a thaw in production activities since the start of 2016, Wintershall was only able to restart production again in onshore concession 96 from September 16th and resumed output at a low level of 35,000 BOE per day, CEO Mario Mehren had announced during the company’s annual press conference at its headquarters in Kassel, Germany.
However, as Mehren was making this statement, he was told during his speech on March 22nd that a fresh wave of conflict had brought operations to a complete halt in Libya.
As such, Wintershall’s prospects in Libya currently lie in dire straits, although the company continues to hold on to Al Jurf offshore field, its key asset there.
In an interview after the press conference, Mehren confirmed to arabianoilandgas.com about Wintershall being in “frequent talks” with Abu Dhabi’s state-owned energy investments arm Mubadala Petroleum to identify and collaborate on potential projects.
So far the discussions mostly being about partnerships in Libya, therefore means that negotiations won’t be maturing this year at least, Mehren revealed in March.
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Libya is targeting an output of 1mn bpd by the end of July. The OPEC member is excluded from a renewed output reduction pact struck by OPEC and non-OPEC producers which runs until the end of March 2018.
But rising supplies from Libya are threatening to overwhelm OPEC’s efforts to rebalance the oil market and reduce global oil inventories.
Saudi Energy minister Khalid al-Falih signalled on Monday in a newspaper interview that Libya is unlikely to be asked to join the cut agreement.
“It is inappropriate to pressure Libya to slow the recovery in its production,” he told London-based Asharq al-Awsat.
He added that Libya and Nigeria, which is also exempt from the cuts, “shouldn’t be considered a threat to the initiative”.
OPEC’s May oil production was up by 336,000 bpd at 32.14mn bpd, led by a rebound in output from the two countries.
