Libya's largest oil field almost completely offline

Libya's largest crude field, El Sharara, has almost completely ceased production, a source with direct knowledge of its operations told Argus.

Some crude is being kept online so the 640MW power plant at Ubari can continue to generate electricity. This plant usually burns around 10,000-15,000 b/d of crude.

El Sharara was producing around 260,000-270,000 b/d before it was ordered to shut down on 3 August.

State-owned NOC has not declared force majeure on shipments of the field's Esharara export grade crude from the Zawia terminal, as is customary under such circumstances, sources said.

Argus understands the shutdown is being orchestrated by the Tobruk-based Libyan National Army (LNA), which controls much of the country's east and south including El Sharara in the southwest. Sources said the order to shut the field came from Saddam Haftar, son of LNA head General Khalifa Haftar. The reason for the shutdown is unclear. The field has been a frequent target of armed groups in the past decade for reasons ranging from local grievances to national political ambitions.

Libya's rival Tripoli-based government said on 4 August that attempts to close El Sharara were "political blackmail."

Field operator Akakus Oil Operations said on 4 August that production was being gradually wound down and that it would stop piping crude to Zawia. Akakus is a joint venture between Spain's Repsol, TotalEnergies, Austria's OMV, Norway's state-controlled Equinor and NOC.

Eight cargoes totalling 5mn bl of Esharara crude are scheduled to be exported from Zawia in August, according to loading programmes. A 630,000 bl cargo chartered by Equinor departed on 3 August, Kpler data showed.

A prolonged shutdown would force NOC to halt operations at its 120,000 b/d refinery at Zawia, which runs on crude from El Sharara, potentially leading to higher imports of refined products.

The forced production outage at El Sharara is the third under NOC chairman Farhat Ben Gudara. The field was most recently shutdown in January, for three weeks.

Opec member Libya typically produces around 1.2mn b/d of crude, but output in recent weeks had increased to about 1.25mn b/d. Some of these gains had been due to Repsol-led development work at El Sharara.

The front-month October Brent contract stood at $76.55/bl at 16:31 BST (15:31 GMT), compared to $76.81/bl at close of trade on Friday, 3 August.

By Aydin Calik and Kuganiga Kuganeswaran