Wintershall dispute limits Libyan oil production growth push

16 May 2017

German group forced to shut in oil production from onshore concession in March

Libya could struggle to meet its crude production targets as a dispute with Wintershall has caused the German oil producer to shut down operations at a key field.

Libya is aiming to bring production up to 1.32 million barrels a day (b/d) this year, having earlier this week reported that its daily average production had reached 814,000 b/d due to the restart of production from the Sharara and El Feel fields.

The North African country has so-far been exempted from the widespread production cut agreed to by other Opec members, which is expected to be extended past its initial 31 June expiry date.

However, a dispute between Libya’s state-owned National Oil Corporation (NOC) and Wintershall has led to a shutdown of the German group’s operating oil fields, which produced 100,000 b/d before the Libyan revolution broke out in February 2011. A spokesperson from Wintershall told MEED the two sides are in contact with NOC regarding the issue.

NOC said in a statement that it had held discussions over a memorandum of understanding (MOU) signed in 2010 to extend Winterhall’s concession for its production areas NC-96 and NC-97 in the Eastern Sirte Basin, where it operates eight onshore oil fields.

Wintershall restarted production on September 2016 after a blockage was lifted on the Zuetina port, where oil produced at the fields is exported from. Production was then stopped on 7 March 2017.

“In the interim period, NOC and Wintershall held a number of meetings to discuss implementing the 2010 MOU. Wintershall chose not to honour its commitments and was not included in the latest loading plans as a consequence,” NOC said in a statement.

It added that exports could continue if Wintershall kept to its agreements, but accused the German group of trying to “interfere in Libyan internal politics” and “take advantage of the weakness of the state”.

In an emailed statement to MEED, a spokesperson from Wintershall said that the company was in contact with NOC about a number of issues. “Our concession agreements with the State of Libya are still valid and in full force,” the company said.

“It would not be an economic exploitation of the petroleum resources of the concession to continue production without generating revenues, but still being obliged to carry all production-related operational expenses,” the spokesperson added.

Libya was producing about 1.6 million b/d of oil before the revolution and subsequent conflict from 2011.

The North African country was aiming to increase production to 900,000 b/d by the end of 2016. Despite missing this target, Libya has boosted production significantly from about 260,000 b/d in August 2016 as it reopened export terminals on the Mediterranean Sea.

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