CONCLUSION: As of today, Libya reported oil production has fallen to 320,000bpd (it was 665,000bpd yesterday), the lowest level since 2011. At its pre-war peak Libya produced over 1.6M bpd of high quality light oil. Several issues have contributed to the dramatic fall in production;
1) striking oil field workers demanding better work conditions and higher pay,
2) an armed group has apparently taken over several fields and pipeline facilities and halted production – no demands have been made of yet but, it is believed that this militia might be hijacking and selling oil without government approvals.
3) longer term, the lack of political direction and security continues to discourage foreign investment in Libya - this will result lower production from Libya for the foreseeable future.
A loss of 1Mbpd of production from Libya for a prolonged period of time may tighten supply and provide further support for oil prices at +$100/bbl level.
Follow these links for press articles and see below from Reuters:
http://online.wsj.com/article/SB10001424127887323324904579040711999886326.html
06:36 27Aug13 -LIBYAN OIL PRODUCTION HAS FALLEN TO 665,000 BARRELS PER DAY - OIL MINISTER
06:39 27Aug13 -Libya says oil production drops to 665,000 bpd
TRIPOLI, Aug 27 (Reuters) - Libyan oil production has fallen to 665,000 barrels per day (BPD) due to a month long disruption by armed security guards who shut down main export ports, the country's oil minister said on Tuesday.
"In Libya we are precisely producing 665,000 bpd as a result of the strikes and the problems arising. We used to produce 1,550,000 bpd and when we produce now 665,000 bpd we are talking about a big difference," Abdelbari al-Arusi said in an interview aired by Libyan television channel Libya al-Hurra.
(Reporting by Suleiman Al-Khalidi; editing by Keiron Henderson) ((suleiman.al-khalidi@thomsonreuters.com)(+962 79 5521407)(Reuters Messaging: suleiman.al-khalidi.reuters.com@thomsonreuters.net))
Keywords: LIBYA/OIL
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