Libya oil output cut by half due to fierce fighting

A series of fierce clashes between rival armed groups in eastern Libya's key oil export ports has caused output to drop by nearly half, the head of Libya’s National Oil Company (NOC) says.

Mustafa Sanallah, the NOC chief, said on Wednesday that the Ras Lanuf and Al-Sidra terminals had been closed since Thursday, when armed groups attacked oil facilities held by forces loyal to General Khalifa Haftar in the country’s east.

"Production has seen a reduction by 450,000 barrels per day, plus 70 million cubic feet of natural gas, equivalent to $33 million in sales based on market prices," Sanallah said. "Maintenance teams are still dealing with the aftermath of the blaze and are trying to ascertain the extent of the damage to the terminal."

According to the NOC, Haftar's self-styled Libyan National Army has since launched an offensive to push militias out of the area, with clashes causing "catastrophic damage."

The armed groups that launched attacks are loyal to rebel leader Ibrahim Jadhran.

Jadhran's Petroleum Facilities Guard controlled the terminals for years following the ouster of former dictator Muammar Gaddafi. They were eventually forced out by the Haftar’s loyalists in September 2016.

The NOC chief, who was in Vienna for a meeting of the Organization of the Petroleum Exporting Countries (OPEC), was revising upwards an earlier NOC estimation that put production losses at 400,000 barrels per day (bpd). Before the output cut, Libya had been producing just over one million barrels of oil per day.

Global oil prices have already surged in the wake of a decision by US President Donald Trump to abandon a multinational nuclear deal with Iran in May.

Libya's economy relies heavily on oil, with production at 1.6 million barrels per day under Gaddafi.

The country has been the scene of increasing violence since 2011, when Gaddafi was toppled from power after a NATO military intervention. His ouster created a huge power vacuum, leading to chaos and emergence of numerous militant groups.

In addition to political rivalries, the rise of extremism and the presence of terrorist groups in the oil-rich country have also culminated in the deterioration of living conditions, including power cuts, exorbitant prices and security issues.

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The country has also had two rival governments since mid-2014, when militants overran the capital Tripoli and forced the parliament to flee to the remote east. The two governments reached a consensus on the formation of the Government of National Accord (GNA) in December 2015, after months of UN-brokered talks in Tunisia and Morocco to restore order to the country. Libya, however, continues to be gripped by political strife and violence.

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