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Libyan Production Tops 1.55Mn B/D

Libyan production of crude and condensate hit a new post-revolution record of 1.554mn b/d in the first half of April, up around 80,000 b/d on March and within 150,000 b/d of pre-war levels.Crude production was 1.48mn b/d and condensate almost 70,000 b/d, James Cockayne reports.

National Oil Corporation (NOC) figures for 6-12 April indicate that the biggest ramp-ups since January, the last time NOC released similarly comprehensive data, have come from the Repsol-led Akakus joint venture, which produces El-Sharara crude from the Murzuq Basin, and the Oasis consortium which groups US firms Marathon, ConocoPhillips and Hess. Both have added over 100,000 b/d since January with production now standing just over 300,000 b/d, compared to pre-war capacity of 360,000 b/d in both cases (see Table 1).

More recently, Germany’s Wintershall has since late March added around 30,000 b/d of production of al- Sarah at its Sirte Basin Blocks NC-96 and NC-97. Despite there being no problems at the field, production had been stuck at around 60,000 b/d due to damage to the pipeline leading to the Ras Lanuf export terminal. There is little hope for the pipeline being repaired in the near term but the company has secured access to a different pipeline, MEES understands, and hopes to continue using this route for the rest of the year. However production at the OMV/Occidental-operated Zueitina field, which normally relies on the same pipeline, remains stuck at 75% of pre-war capacity.

Total has continued to increase production from its Mabruk and al-Jurf fields. The company’s early April output would have been stronger were it not for a two-day shutdown at the al-Jurf offshore field during the 6-12 April period “to allow maintenance of surface equipment,” according to NOC. It is unclear if this is related to ongoing development drilling at the fields (MEES, 2 April).

NOC affiliate AGOCO’s figure of around 325,000 b/d is only a relatively modest increase on the company’s mid-March figure of 305,000 b/d (MEES, 9 April). The company has said that a further ramp-up later in April at its key Sarir and Mesla fields will take production back to close to pre-war capacity of around 400,000 b/d. However, market indications of crude export volumes for April and May indicate that this may prove optimistic.

For March, Libya produced 1.403mn b/d of crude (excluding condensate) according to figures supplied by Libya to OPEC and included in the organization’s March Monthly Oil Market Report . Although this is higher than earlier MEES estimates, Libya’s post-revolution statistics are thought to be realistic. For February Libyan crude production had already reached 1.368mn b/d, according to the OPEC report.

Table 1: Libyan Crude And Condensate Production, 6-12 April ('000 B/D)

*Includes Total-operated al-Jurf offshore production from Block C-137.

**January 2011 production was around 1.7mn b/d, well below capacity.

Source : NOC, MEES calculations.

Gas output has risen by a more modest 7% since January. The Eni-operated offshore Bahr al-Salam and onshore Wafa fields account for 70% of Libya’s gas production – much of which is shipped to Italy via the 8 bcm/year Greenstream pipeline – have been producing at a steady 1.5bn cfd (15.5 bcm/y) since January (MEES, 13 February).

Table 2: Libyan Gas Production, 6-12 April (Mn CFD)

*Includes Total-operated al-Jurf offshore production from Block C-137.

Source : NOC, MEES calculations.

NOC is continuing its attempts to persuade firms to return to exploration. With a key problem being the reluctance of service companies to re-engage, NOC has been keen to trumpet any service or maintenance activity that could be presented as a return to normality. It says that on 21 April the Advanced Environmental Company for Construction, a Libyan-German joint venture, is restarting work (suspended since the revolution) on installing a fiber optic network to improve communications between Libya’s Sirte Basin oil fields, namely fields operated by Oasis, AGOCO, Mellitah, Zueitina, Harouge, Mabruk and Wintershall.

However, despite NOC’s attempts to project an air of normalcy, security remains the key issue preventing the re-start of normal exploration activity. Some 80 employees of Tunisian engineering company Socomenin were abducted by an armed militia and held prisoner in Zawiya for two days last week in retaliation for the arrest of three Libyans in Tunisia. They were only freed when the Libyans were also freed. Zawiya is around 100km from the Tunisian border and only 50km from the town of Zuwara, which saw heavy fighting between Berber and Arab militias in the first week of April (MEES, 9 April).

China Gobbles Up Libyan Crude

Meanwhile, detailed export data for the first quarter 2012, published on the NOC’s website, shows that Libyan exports averaged 1.21mn b/d for the first quarter, with volumes rising to a post-war record of 1.6mn b/d for the second half of March. The late March number is higher than crude production for the period and reflects an uneven port loading schedule, in addition to the continued outage of the country’s key Ras Lanuf refinery. Italy remains by far the biggest buyer of Libyan crude, taking almost 510,000 b/d for the first quarter – 42% of Libya’s total exports. But the second-biggest buyer of Libyan crude is now China, taking 193,000 b/d for January-March, or 16% of total exports. Three-quarters of China’s purchases are Sarir crude (12.4mn barrels). France and Spain come next with about 10% of total exports each (see Table 3).

Table 3: Libyan Crude Exports January-March (Mn Barrels)

Source : NOC, MEES calculations.

Libya is casting its net wide in the search for crude export customers. In addition to the almost 200,000 b/d which headed to China – the equivalent to six 1mn barrel cargoes each month – and almost 1mn barrels a month to the US - Libya sold crude to six other long haul destinations. One cargo each headed to Indonesia, Ghana, Singapore and South Korea during the quarter, whilst two cargoes went to Australia and Malaysia. Libyan crude typically loads in cargo sizes of 600,000-1mn barrels.

For April exports are set are set to remain at bumper levels of around 1.4mn b/d, due to a combination of recovering crude production and the continued outage of the 220,000 b/d Ras Lanuf refinery. Initial indications are that May exports will be at similar volumes – suggesting that Ras Lanuf may not be back on stream anytime soon, and that problems at AGOCO’s Messla and Sarir fields, which normally feed the plant, are more severe than previously thought. AGOCO earlier indicated that the electrical problems that had held back ramping up the fields to full capacity were almost fixed.

April will see the first Libyan crude heading to Japan this year (2mn barrels), whilst for May Libyan crude will head to India with refiner Bharat Petroleum taking a 1mn barrels May-loading cargo from trader Glencore via a tender. Turkey is also set to ramp up volumes from the 22,000 b/d it took for January-March, with the country’s Foreign Ministry recently saying Ankara will partly replace Iranian barrels with additional purchases of 1mn tons of Libyan crude for the remainder of 2012 – equating to just under one 1mn-barrel cargo a month for April to December. The Greek government has also said it is looking partly to Libya to replace lost Iranian term barrels (MEES, 16 March)

Domestic Refining

Also among the reams of statistics recently released by NOC were numbers for crude volumes supplied to domestic refineries. Libya refined 13.24mn barrels (145,000 b/d) of its crude domestically during the first quarter, of which 9.91mn barrels was Sharara crude, produced by the Repsol-led Akakus joint venture, and most of the rest AGOCO-produced Sarir crude.

Of course it says much about the transparency of the ‘New Libya,’ compared to the Qadhafi years, that NOC is releasing such data (see page 20). However, data releases have been erratic, making comparisons difficult. For example, crude production data has been released three times this year but, not only has the timing of releases been erratic but on each occasion the data has covered a different period of time (ranging from one month – January – to one day – 4 February – with the latest crude production data covering one week – April 6-12). In addition, the latest data was posted on a different section of NOC’s website to the earlier releases.

© Copyright MEES 2012.