Biggest Libyan Oil Field Is Said to Reopen Pipeline on Deal

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SEPTEMBER 6, 2017 – The pipeline that transports crude from Libya’s largest oil field reopened after a halt of more than two weeks, putting pressure on OPEC and other producers seeking to rein in a global supply glut and firm up prices.

Libyan authorities reopened a valve on the pipeline from the southwestern Sharara field to the Zawiya refinery after they reached a final agreement with a militia group that had closed the link, according to a person familiar with the matter, who asked not to be identified because the information is private. The pipeline’s reopening is a step toward allowing Sharara to resume output on Wednesday, the person said.

State-run National Oil Corp. accused the group earlier of closing three fields since August 19. Two of the deposits — El-Feel, also known as Elephant, and Hamada — resumed production last week, other people familiar with the matter said at the time.

The North African nation’s crude output dropped 35 percent after the forced closing of the three fields, disrupting a revival of its production. However, the decline helped ease the burden on the Organization of Petroleum Exporting Countries and allied suppliers as they sought to strengthen their accord to cut output. Libya, like its fellow OPEC member member Nigeria, is exempt from the global production cuts because of internal strife.

The NOC has blamed a militia organization it called the Rayayina Patrols Brigade for the disruptions, including the August 19 shutdown of the pipeline valve that curbed Sharara’s output by 283,000 barrels a day. Sharara, with a production capacity of 330,000 barrels a day, is run by a joint venture between the NOC and Repsol SA, Total SA, OMV AG and Statoil ASA.

Libya, which holds Africa’s largest crude reserves, was pumping 1.6 million barrels a day before a revolt in 2011 set off years of fighting among rival governments and militias. The nation’s output had reached a four-year high of 1.01 million barrels in July, according to data compiled by Bloomberg.

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