(Updates with oil minister’s timetable for operations to resume in second paragraph; Goldman outlook in fifth.)
Oct. 29 (Bloomberg) -- Libya’s oil output dropped by half from a week ago as minority Tuareg nomads protesting for greater political recognition halted crude flows from the Sharara field, an official at the OPEC member’s state oil company said.
Nationwide production fell to between 250,000 barrels and 300,000 barrels a day, from more than 600,000 on Oct. 21, Mohamed El Elharari, a spokesman for Tripoli-based National Oil Corp., said in a phone interview yesterday. Oil Minister Abdulbari Al-Arusi said operations at Sharara, which produces 350,000 barrels a day, will resume in 24 hours, the official Libya News Agency reported today.
Tuareg, a southern, nomadic branch of the Amazigh, or Berber people, demand that the government recognize their language alongside Arabic in a future constitution and accuse parliament of ignoring their grievances. “We will carry on with the sit-ins and protests,” Ibrahim Al Damja, a Tuareg activist, said yesterday in a phone interview from the capital Tripoli.
The stoppage at Repsol SA-operated Sharara, about 700 kilometers (435 miles) south of Tripoli, is the latest disruption of Libya’s oil supply by protesters, including workers and armed militia, who seek influence over the North African nation’s petroleum industry. Libya, holder of the continent’s largest oil reserves, pumped 1.6 million barrels a day before the conflict that led to the ouster and death of Muammar Qaddafi in 2011.
Authorities have failed since then to fully restore production and exports amid almost daily protests and sit-ins. Output averaged about 1.3 million barrels a day in the first six months of this year, before tumbling, according to data compiled by Bloomberg. Libyan supply will be constrained at about 650,000 barrels a day through the end of this year, and the potential for further disruptions increases the risk of higher oil prices, Goldman Sachs Group Inc. said yesterday in an e-mailed report.
North Sea Brent crude rallied 2.5 percent yesterday, the most since Oct. 10, to settle $109.61 a barrel amid the Libyan protests. Brent futures were at $109.01 a barrel at 6:50 a.m. local time on the London-based ICE Futures Europe exchange.
Some members of the national Petroleum Facilities Guard in eastern Libya have seized control and closed the ports of Es Sider, Ras Lanuf, Hariga and Zueitina since July to pressure the government to send them money and equipment, protesting alleged corruption in the oil ministry. In the west, Amazigh from the city of Zuwara have threatened to shut down the Mellitah industrial complex to press their demands for language rights, Elharari said.
“The weak government is responsible for this dangerous deterioration,” Ahmed Al-Atrash, professor of political science at the University of Tripoli, said yesterday. Disruptions in the oil industry have deprived Libya of $50 billion in revenue this year, according to NOC.
Amazigh protesters closed the pipeline carrying fuel from the Eni SpA-operated Wafa field in the west to Mellitah on Sept. 30, and it remains closed. The situation in Libya is “still difficult,” Paolo Scaroni, chief executive officer of Italy’s Eni, said on Oct. 21.
Instability in Libyan oil supply over the past few months is driving refiners away, said Miswin Mahesh, a commodities analyst at Barclays Plc in London.
“Refineries are in a tentative state in sourcing alternate sources, as they are unsure whether they will have commitments from their contractual obligations with Libya, if volumes were to return,” Mahesh said in an e-mail. Refiners will switch to other sources altogether if the situation continues, he said.
Al-Arusi, the oil minister, visited the Sharara field late Monday and said the ministry will set up a refinery and oil company in the local Ubari region, Lana reported.
--With assistance from Nayla Razzouk in Dubai. Editors: Bruce Stanley, Dale Crofts