- Libyas oil production is at roughly a quarter of the output before the 2011 uprising
- Protests have resumed at the eastern port of Zueitina
- Worker protests and the blockading of onshore oil facilities are expected to continue
- Isis is likely to try and exploit the revenue-earning potential of Libyas oil assets
Libyas oil production currently stands at just below 400,000 barrels a day (b/d), roughly a quarter of the output before the 2011 uprising, and it is unlikely to see much improvement over coming months due to an upsurge in protest action and the ongoing political impasse between the countrys two rival governments.
The break-up in early July of the latest round of UN-mediated political talks without an agreement further set back hopes for an imminent revival of Libyas oil sector.
In recent months, protests have resumed at the eastern port of Zueitina, which has an export capacity of 150,000 b/d. The bigger ports of El-Sider and Ras Lanuf, which have a combined capacity of 550,000 b/d, have remained shut this year, despite official statements in April that they would reopen within weeks. A lack of security is behind their continued closure; the ports lie in the borderland between territories controlled by the two rival governments and have been the scene of regular clashes.
Brega, a port with a capacity of 120,000 b/d, also remains shut due to civil action, although an agreement between Libyan authorities and protesters has been announced and there is optimism that production could restart over coming weeks.
The protests at the port of Brega and the lack of activity at the El-Sharara field, which has been offline since November, have had a knock-on effect for the Azzawiya port, which has seen limited supplies of crude due to the shutdown.
This in turn has affected fuel supplies for Tripoli and the wider western region. The El-Feel field also remains closed after guards started to protest over unpaid salaries in April.
The recent developments suggest significant issues with salary payment for petroleum facilities guards, and point towards continued disruptions from protests over coming weeks, says Richard Mallinson, an analyst for UK-based oil and gas research company Energy Aspects.
From local sources, we understand guards at some facilities claim not to have been paid in five months, he says. It is unclear whether the problems are because the central bank is not releasing sufficient funds for salary payments or because the money is not reaching the guards themselves.
According to Mallinson, the supply disruptions caused by the local protests that have taken place over recent months have been more sporadic than previous shutdowns, such as the blockade of the eastern terminals by Ibrahim Jathran in 2013/14.
Libyan output is likely to fluctuate between 300,000 b/d and 500,000 b/d in the coming weeks and will only be able to rise past this level if both governments can improve the payment of salaries to guards and meet other local protester demands, says Mallinson. With oil prices still low and the two governments still competing for control of oil revenues, the salary situation is unlikely to improve any time soon.
Another worsening threat to Libyan oil production is the expansion of the jihadist group Islamic State in Iraq and Syria (Isis), which has significantly increased its activities in the country since late 2014.
Earlier this year, the group attacked several oil fields including Mabruk, Bahi, Dahra and Ghani, causing them to be shut down and forcing state-owned National Oil Corporation (NOC) to declare force majeure on several of its assets.
Operators are worried about their staff falling into the hands of the militants and are not confident that either government can provide security, says Mallinson.
UK defence research company IHS Janes 360 has also identified Isis as a significant threat to Libyas oil operations.
In a report published on 28 May, it said the groups presence in the central city of Sirte as well as the eastern city of Benghazi and nearby Ajdabiya gave it easy access to key oil terminals including El-Sider, Ras Lanuf, Brega and Zueitina.
IHS warns that Isis is likely to try and exploit the revenue-earning potential of Libyas oil assets, including the export terminals. It also warns that any assets the group believes it cannot use to earn income are likely to be attacked and destroyed to deny their use by the state.
This feeds into Isis broader strategy of eroding the capacity of either government to reduce the insecurity, which fuels the groups expansion strategy, says Richard Cochrane, an IHS analyst.
Cochrane has identified the oil fields in the western Sirte Basin as most at risk due to their proximity to the Isis stronghold of Al-Naufaliya, which lies about 200 kilometres away.
Although security in Libya has worsened significantly over the past 12 months and production is a fraction of pre-revolution levels, there are some areas of resilience.
Italian oil company Eni has continued to perform strongly in Libya despite the chaos. In May, it reported that its production was about 300,000 b/d, bringing output above its pre-revolution levels of 280,000 b/d. The firm has also announced two offshore hydrocarbons discoveries this year in the exploration zone known as Area D, which lies about 140km from the coast.
All other international oil companies have seen dramatic declines in output from their Libyan operations.
While it is uncertain how long Eni will be able to maintain its production levels amid the worsening security situation, in public the company has been optimistic about the outlook. In April, Eni said it was expecting its Libya production to further increase over the course of 2015.
Analysts have put Enis success down to its long history of working in Libya, which has given it the ability to successfully negotiate with local tribes and powerbrokers in order to maintain production. The firm has also benefited from continuing production from its offshore facilities.
As much of Libyas onshore infrastructure remains vulnerable to being hijacked or attacked by armed groups, many onshore projects have been shelved. But offshore operations are seeing some investment activity due to the fact that these are harder for armed groups to access and attack.
On 28 May, offshore specialist OneSubsea, which is a joint venture of US oil field services companies Cameron and Schlumberger, announced it had been awarded a $330m contract by Mellitah Oil & Gas, a joint venture of Eni and NOC.
The contract involves the design, procurement, manufacturing and fabrication of a subsea production system for phase two of the Bahr Essalam project, and is the largest award for a subsea production system within North Africa to date.
It is, however, just one bright spot in an otherwise dismal picture for Libyas hydrocarbons sector. With Africas largest oil reserves, the potential for production in the country is huge, but due to the ongoing unrest, the outlook for when that potential will be realised looks bleak.
Worker protests and the blockading of onshore oil facilities are expected to continue as state institutions weaken and their ability to provide salaries, jobs, security and benefits to communities diminishes.
At the same time, the UN-mediated peace process has done little to increase cooperation between the two rival governments, which continue to fight for control of hydrocarbons revenues, rather than focusing on how to restore production.
Amid this chaos, the growing presence of Isis has added another dimension to the problems faced by the oil and gas sector, and has given companies considering investing in developing Libyas vast oil reserves another reason to look elsewhere.