Libya resumes full oil production

Libya’s state oil company said Thursday it was resuming full oil production, nearly two months after halting operations at two of its main fields amid a political crisis.

The National Oil Corporation said in a statement that it would resume production at the Sharara and El-Feel oil fields , as well as exports from Es Sider, the country’s largest port.

In August, the company declared “force majeure, ” a legal manoeuvre that allows a company to walk away from its contracts due to extraordinary circumstances.

As part of the review of the force majeure situation, the NOC confirmed in its statement that it “can resume crude oil production operations and export operations to its customers.”

The National Oil Corporation had previously blamed the Fezzan Movement, a local protest group, for the shutdown.

The shutdown comes as rival authorities in the country are locked in a dispute over governance of the central bank, which distributes the country’s oil revenues.

In August, Diaspora Digital Media gathered that the United Nations warned that the country was on the verge of even greater instability because of the conflict.

But the problem was resolved in recent days when parliament appointed a new governor to the bank.

Libya produces more than 1.2 million barrels of oil per day, and Sharara is the country’s largest field, producing up to 300,000 barrels per day.

The oil-rich country has been gripped by political turmoil since a NATO-backed uprising toppled and killed Muammar Gaddafi in 2011.

Since then, the country has been divided between rival administrations in the east and west, each backed by militias and foreign governments.

The nation’s oil abundance has ironically become a curse, fueling the country’s turmoil.

The nation has the largest crude oil reserves in Africa, with the hydrocarbons sector accounting for more than 65% of GDP, over 95% of export earnings, and 96% of the budget.

However, this wealth hasn’t translated into stability or economic growth.

*The Resource Curse
Libya’s reliance on oil has led to authoritarianism, corruption, and state capture by individuals or groups.

The lack of security and political turbulence has allowed terrorist groups and armed militias to control oil production facilities, further destabilizing the economy.

*Factions and Conflict
The country is divided between the Tripoli-based Government of National Accord (GNA) and the Tobruk-based House of Representatives, backed by the Libyan National Army (LNA).

These factions, along with various militias, are fighting for control of oil facilities, which would grant them significant revenue and political power.

*Economic Consequences
The ongoing conflict has resulted in lost oil revenues, with estimates suggesting over $68 billion in forgone revenue since 2013.

Despite Libya’s real GDP per capita being among the highest in Africa, the country faces significant challenges in rebuilding its economy.

*Path to Recovery
The International Monetary Fund (IMF) notes that Libyan oil production has recovered faster than expected, but the country still faces a long rebuilding effort.

Addressing the resource curse and finding a way to manage oil revenues effectively will be crucial to Libya’s stability and economic growth.

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