Concerns emerge over Libya oil data reliability

30 September 2014

Official figures may be 200,000 barrels a day more than actual production

Doubts about the accuracy of official oil numbers being published by Libya’s National Oil Corporation (NOC) are increasing as the country reports a rapid rise in oil production amid rising violence and political instability.

Analysts are warning that actual production could be as much as 200,000 barrels a day (b/d) less than the official NOC figures.

“The jumps of 100,000 or 200,000 b/d [reported by NOC] don’t really match up with all of the data the market has been seeing, or our experience of what’s realistic,” says Richard Mallinson, an analyst for UK research company Energy Aspects.

On 28 September, Libya announced it was producing oil at a rate of 900,000 b/d. Energy Aspects believes the true figure is likely to be close to 700,000 b/d, based on data tracking oil tankers and exports.

“I don’t believe Libya is pursuing a deliberate strategy,” says Mallinson. “The inaccuracy is more likely to be tied to the challenge of gathering data in a chaotic operating environment, and optimism on the part of NOC.”

NOC did not respond to requests for details on how it compiled its data.

Over recent years, protests and fighting between militias have caused damage to the country’s infrastructure, and have prevented repairs to equipment that was damaged during the revolution, including devices used to meter oil production.

Libya’s oil sector has seen significant disruption since the 2011 uprising, including a year-long blockade that caused output to slump to less than 100,000 b/d in May.

Since the port blockade was resolved in July, the country has seen a dramatic recovery in production levels, but analysts are concerned that official figures are exaggerating the speed and strength of the recovery.

Over the first 23 days of September, crude exports tracked by Bloomberg averaged at just over 500,000 b/d, while the average derived from figures published by the NOC was almost 800,000 b/d.

The difference between the NOC production data and independent export figures is nearly 300,000 b/d.

Some of this can be accounted for through domestic consumption, but due to disruptions at local refineries, this could be as little as 100,000 b/d

Ras Lanuf, Libya’s largest refinery, is closed and Zawiya, the second-largest refinery, has seen disruptions to operations due to fighting nearby.

“Libya is producing a lot more oil than during the worst point in its crisis, and it is doing far better than the wider political and security situation would at first lead you to expect,” says Mallinson. “I would be surprised if there was a discrepancy of more than 200,000 b/d. This would really test the credibility of NOC.”

Michael Barry, an analyst at UK consultancy FGE, agrees that as hostilities have increased, it has become harder to be sure of Libyan oil production figures.

“Observers have become increasingly reliant on the NOC figures as it is the only body publishing production data and it’s very difficult for any independent verification as the country has become so dangerous,” he says.

“It is possible NOC is massaging the figures, but the degree to which improvements can be overstated is limited. The majority of the produced crude is exported and these shipments are easily tracked and verified.”

Analysts are also concerned a possible political tussle over NOC could impact the quality of data being published.

Libya’s elected parliament, the House of Representatives, recently unveiled a new cabinet that did not include an oil minister, choosing instead to put NOC in charge of the sector.

The House of Representatives is currently based in the small eastern city of Tobruk due to security concerns in Tripoli and Benghazi.

Meanwhile, a rival militia-supported parliament holds sway in the capital, and has released videos online showing it is in control of NOC buildings.

The videos have prompted doubts about how well NOC is functioning and how much influence the Tobruk-based government has in the rest of the country.

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