El Sharara, Libya’s largest oilfield, has been under force majeure since December 2018. The uncertainty surrounding oil flows from the field is a reflection of the instability and chaos that engulfs the entire country.
Exports of El Sharara grade from the western Zawiya port plummeted from 281,000 bpd in October to 126,000 bpd in December, the lowest monthly volume seen for the year. The National Oil Corp. (NOC) declared force majeure on the grade on December 9 after accusing an armed group of "forcibly" shutting down production at El Sharara. The company has yet to announce the end of force majeure on both the oilfield and exports of El Sharara crude.
Instability at El Sharara became increasingly more common in late 2018. Its Station 186 was reportedly attacked many times last year. Substation B-6NC-186 was targeted most recently on November 20. Similar attacks continued even after NOC declared force majeure on El Sharara in December.
In October, total Libyan crude and condensate exports were close to a five-year high at 1.2mn bpd due to strength in El Sharara crude flows, as well as from the eastern ports of Marsa al-Hariga, Ras Lanuf and Es Sider. The increases we saw from Marsa al-Hariga and Ras Lanuf were attributed to improved power supplies and completed maintenance at some oilfields, Sarir and Amal oilfields included.
In December, despite the force majeure at El Sharara, Libya’s exports were around 1mn bpd. Instability, however, remains a chronic concern. On January 3, NOC highlighted the lingering security issues at El Sharara, calling for urgent security measures to stop the "looting" at the field. The company’s pleas show that so long as El Sharara is under threat, the whole of Libya’s oil sector is at risk.
Libyan crude and condensate exports averaged 967,000 bpd in 2018, up more than 200,000 bpd from the prior year. Three of the four leading destinations from 2017 were unchanged in the year following: Italy maintained its status as leading destination, accounting for nearly a third of total receipts in 2018, while both Spain and France saw their imports grow strongly on a percentage basis – France by 37 percent and Spain by 29 percent.
But it has been the strength in Chinese crude imports that stands out as the biggest development in Libyan export flows in 2018. After averaging just under 50,000 bpd in 2017, exports last year more than tripled to China, now the largest crude-importing nation in the world. Exports there are boosted by comparatively cheaper light crude prices (versus heavier Middle East barrels) and a drop in US crude flows to China amid rising trade war tensions.