The shutdown of Libyan oil production is underway

Oil production from several Libyan oil fields was halted on Tuesday after the rival government in the east announced on Monday a halt to oil production and exports from the African OPEC producer.

Crude production from the El Feel oil field in southwestern Libya has stopped, engineers told Reuters on Tuesday.

Engineers at several other oil fields in the east and southeast have halted or reduced production. Local operators have indicated to Bloomberg that they will phase out production across the country.

Libya, which pumps about 1.2 million barrels per day (bpd) of oil, was plunged into a deeper political crisis earlier this month after a row over the leadership of the Central Bank of Libya, the only internationally recognized depository of Libya’s oil revenues.

The government of Benghazi in eastern Libya, which is a rival of the Tripoli government in the politically divided North African OPEC producer, said on Monday it would halt crude production and exports.

The eastern government backed by military leader Khalifa Haftar is not recognized internationally, but Haftar and his men control most of the country’s oil fields.

In recent weeks, the situation in Libya has deteriorated and the east-west rivalry has flared up again and centered on the leadership of the Central Bank of Libya – the guardian of Libya’s wealth and oil export revenues.

The internationally recognized government in the western capital, Tripoli, is seeking to replace Sadiq Al-Kabir, the governor of Libya’s Central Bank. This led to the latest controversy between eastern and western governments and political factions, again threatening to cut Libya’s oil production and exports.

Meanwhile, the United Nations Support Mission in Libya (UNSMIL) on Monday expressed “deep concern over the deterioration of the situation in Libya as a result of unilateral decisions”.

UNSMIL warned that “continuing unilateral actions will come at a high cost to the Libyan people to resolve the protracted crisis and risk precipitating the country’s financial and economic collapse.”

By Tsvetana Paraskova for Oilprice.com

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