Libya Closes Biggest Oil Field and Warns of More Shutdowns

(Bloomberg) -- Libya shut down its biggest oil field on Monday and warned of further outages as a wave of demonstrations against the prime minister engulfs the OPEC member’s energy industry.

More than half Libya’s normal production of roughly 1.2 million barrels a day could be down, according to Bloomberg’s estimates. 

The Sharara field in the west of the country was closed after protesters gathered at the site demanding Abdul Hamid Dbeibah’s ouster, according to people familiar with the matter. That came after the nearby El Feel deposit was halted for the same reason.

State-owned National Oil Corp. formally suspended loadings from the eastern port of Zueitina on Monday and said it was the “start of a painful wave of closures.” The NOC has also declared force majeure -- a clause in contracts allowing exports to be stopped -- from Mellitah, a western port fed by Sharara and El Feel.

Workers at the companies of Zueitina, Mellitah, Sarir and AGOCO were forced “to completely and gradually shut down production,” the NOC said.

Sharara has a capacity of around 300,000 barrels per day, while El Feel can pump 65,000 barrels daily.

Output across the country could come to an almost total halt if protesters follow through on threats to close the ports of Es Sider and Ras Lanuf.

“The NOC has always stressed the importance of neutralizing the oil sector and avoiding the political conflicts in the country,” it said in a statement.

The shutdowns are the latest in a series of disruptions to hit Libya amid the worsening political crisis.

Oil prices climbed early on Monday partly because of the interruptions. They come at a delicate time for global commodity markets. Crude supplies have tightened since Russia’s invasion of Ukraine and Brent’s soared above $110 a barrel.

Politicians Face Off

The North African nation, mired in conflict since the 2011 fall of dictator Moammar Al Qaddafi, is facing a standoff between rival politicians. Dbeibah is resisting calls from some lawmakers to resign after they declared former interior minister Fathi Bashagha as prime minister in February.

Earlier this month, representatives of eastern commander Khalifa Haftar quit a national military committee that’s meant to ensure a cease-fire holds. They also said Haftar should block oil exports.

Libya was scheduled to hold a presidential election in December. But it was delayed with just days to go, dealing a blow to peace efforts.

(Updates from fourth paragraph with more shutdowns and production estimates.)

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