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Thursday, April 25, 2024 14:31 GMT
Libyan crude output is poised to fall to a 14-month low this week due to a blockade at its key western oil fields along with pipeline maintenance at the eastern Waha oil fields. This comes as Libya's political stability hangs in the balance, with still no clarity on when elections may occur after they were canceled on Dec. 24. The North African producer is pumping around 700,000 b/d at the moment, Libya-based sources told S&P Global Platts Jan. 4, a fall of around 500,000 b/d from mid-December. On Jan. 3. state-owned National Oil Corporation said pipeline that connects the Samah and Dahra fields to the 350,000 b/d Es Sider terminal will be shut for repairs, causing a production fall of around 200,000 b/d. The 32-inch pipeline which carries crude from the Samah and Dahra oil fields to the Es Sider port has suffered numerous leaks in the past year due to its fragility.Meanwhile, Libya's key southwestern oil fields of Sharara, El Feel, Wafa and Hamada, and the 300,000 b/d Zawiya oil terminal, have all been shut down since Dec. 20 after a blockade by a unit of the Petroleum Facilities Guards. At the time, NOC said the blockade would result in a loss of more than 300,000 b/d, prompting it to declare force majeure on operations at these facilities. An armed group affiliated with PFG has closed the four oil fields and the pipeline which connects Sharara into the Zawiya oil terminal, due to a dispute with NOC. The country's oil industry has since the 2011 civil war been at the mercy of groups vying for the control of valuable assets, with armed attacks on key pipelines and production facilities .Election doubtsInternational efforts to end decades of political and regional conflict in the OPEC member country continue to face setbacks after Libya failed to hold its Dec. 24 elections due to problems with registering candidates. The country's election commission has proposed delaying the first round of the long-awaited presidential election until Jan. 24. But many analysts said it is unlikely elections will take place this month as the delay has cast doubt on the credibility of the UN-backed Government of National Unity and its Prime Minister Abdul Hamid Dbeibah. The GNU's relationship with the eastern-based House of Representatives will now dictate the political future of the North African oil producer. Elections are definitely not happening in Q1 2022, according to Iliasse Sdiqui, associate director at Whispering Bell, a risk management company covering North Africa. "All outcomes hinge on the HoR's next move and whether it will form a new interim government or extend the GNU's mandate. Convoys flocking to the capital over the past week to shore up Dbeibah's posture," he added. "In a best-case scenario, they will happen in six months." S&P Global Platts Analytics had flagged an election-related flare-up to be a top oil market risk for 2022. "We forecast [Libyan oil output of] 1.1 million b/d in 2022, 100,000 b/d below capacity, but supply risks point squarely to the downside," it said in a recent note. The last election in Libya was in 2014 and resulted in two rival governments, after which crude output was below 500,000 b/d for nearly two years. The OPEC member has also been facing issues arising from its exhausted infrastructure and a lack of funds. Libya's crude production averaged around 1.11 million b/d in 2021, according to Platts estimates, compared to 360,000 b/d and 1.05 million b/d in 2020 and 2019 respectively.