Libya restarts first eastern oil field since January

Crude output has resumed in eastern Libya for the first time since blockades paralysed the country's oil sector in January.

The Mesla field — which was producing 60,000-80,000 b/d in the months before the shutdown — restarted last night, according to a field engineer. The production is not being exported. It is supplying the 10,000 b/d Sarir refinery.

Mesla is operated by state-owned NOC subsidiary Agoco, which also runs the Sarir, al-Bayda, Nafoora and Hamada fields. Mesla output is typically commingled with Sarir production and exported from the Marsa el-Hariga terminal.

Crude output and exports from all of Libya's onshore oil fields was halted in January amid an escalation of the country's civil war and rising tensions between regional tribal factions. Fields in the east of the country were shut by groups acting under the instruction of Khalifa Haftar's Libyan National Army (LNA). The LNA has been leveraging Libya's overwhelming dependence on oil revenues in a campaign to take control of the capital city Tripoli from the UN-backed Government of National Accord (GNA).

Oil fields in western Libya have also been occcupied by local tribes. State-owned NOC said the 300,000 b/d El Sharara field was infiltrated by Russian and foreign mercenaries last week. Only the offshore Al Jurf and Bouri fields have maintained crude output throughout the blockades, producing 80,000 b/d in May, according to Argus estimates.

NOC confirmed earlier this week that negotiations have been taking place with the GNA, UN, US and "regional countries" to lift the blockades, which have already cost Libya over $6bn in lost oil revenue since the start of the year. Talks are also under way with tribal leaders about resuming operations at the country's eastern oil terminals, with two Libya-based sources signalling that progress is being made. Any tribal agreement would likely see control of the terminals transferred to Haftar, whose forces have now largely retreated to eastern Libya where they have historically enjoyed popular support.

Talks continue to hinge on foreign interference and the transparency of oil revenue distribution — a persistent grievance from some regions which claim they do not receive a sufficient share of the proceeds. Haftar has accused Libya's Central Bank — which previously received all of NOC's revenues — of misusing the payments to fund mercenaries against him.

A Libya source said one of the proposals in the talks is to split NOC's revenues between three banks in three different regions: Tripoli in the northwest, Fezzan in the southwest and Tobruk in the east. Fezzan is home to tribes that have repeatedly interrupted crude flows from the El Sharara field in recent years.

By Ruxandra Iordache