Libyan oil output returns to normal, short Jan programmes seen

Wed Dec 19, 2012 7:53pm IST

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* El Sharara production at around 330,000 bpd

* Major pipeline to Es Sider port fixed

* January programmes on Es Sider, El Sharara to be smaller

By Julia Payne and Marie-Louise Gumuchian

LONDON/TRIPOLI, Dec 19 (Reuters) - Output of Libya's two main crude oil streams, El Sharara and Es Sider, has returned close to normal levels after protests and a pipeline leak forced operators to cut production last week, officials at Libya's National Oil Corporation said.

Over a third of Libya's 1.3 million barrels per day (bpd) of oil exports was halted last week after production on its two main grades ceased. Buyers of Libyan crude now expect shorter-than-usual loading programmes for January.

Es Sider exports are expected to be around five cargoes less than the usual 15-17 cargoes, and El Sharara exports are also expected to be smaller by a similar amount, traders said. Es Sider dates have started to emerge, but lifters are still in the dark regarding El Sharara.

El Sharara production returned to around 330,000 barrels per day (bpd) as of late Tuesday, a senior Libyan oil official said after Oil Minister Abdelbari al-Arusi gave the go-ahead a few days ago.

Output is normally 350,000 to 360,000 bpd, and that level is expected to be reached later on Wednesday, a spokesman for Repsol said.

Protests in the southern area around Obari led operating company Akakus, a joint venture between Libya's NOC and Spain's Repsol, to decide to reduce and then completely halt production for several days last week for safety reasons.

Exports stopped for several days last week, but buyers resumed lifting again on Friday morning after Akakus began ramping up production from the port of Zawiya.

"It has now gone back to around normal production," the Libyan oil official said. An official at Akakus said that "production is continuing; the demonstrations are over".

Such incidents are not isolated. Social unrest periodically affects output, refining and port operations as Libya's new leaders struggle to impose authority after last year's war.

SOCIAL DEMANDS

Libya's total output has recovered faster than expected to around 1.5-1.6 million barrels per day after the war. The country is Africa's third-largest oil producer and a member of the Organization of Petroleum Exporting Countries.

Most recently, operations at Libya's second-largest refinery at Zawiya, fed by El Sharara crude, had to be halted in November due to protests by wounded war veterans.

At Sharara , around 200 local began protesting on Dec. 6 for social demands, several sources said, which prompted Libyan Oil Ministry officials including the minister to fly to the site on Dec. 17 to evaluate the situation.

"The decision (to stop production) was taken by the field superintendent in accordance with company management. The authorization was given to reduce, then stop (output) from a safety point of view," the Libyan oil official said.

On the eastern side of the North African country, exports of Es Sider were halted for about a week after a leak on a major pipeline connecting the fields to the oil terminal forced the operator to cut some output.

The Waha Oil Company, an NOC joint venture with Conoco , Hess and Marathon, operates the Es Sider terminal and oil output.

"This pipeline is old, dates back from the 1960s. There were corrosion problems. It was being fixed for a few days, and now the problem is resolved," an official at Waha said.

Oil is now flowing again between Dahra field and the port, he added. Total output is usually around 320,000 bpd from four fields - Waha, Gialo, Dahra and Samah.

The temporary shortage of Libyan crude has helped underpin spot differentials on alternative light sweet grades, counterbalancing falling demand as a result of low margins. Bad weather has further worsened loading delays of around five to six days.

Lifters of crude also still awaited the announcement of their 2013 term allocations after they met with Libyan NOC officials at the end of November in Istanbul to negotiate contracts. (additional reporting by Ali Shuaib; editing by Jane Baird)

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