Libya is emerging as a key risk to the successful implementation to OPEC’s supply cut deal, as it ramps up production from its largest oil field after two years of civil unrest. The Sharara field, located in southwest Libya, will export nearly 1.9 MMbbls in January, according to data seen by Bloomberg. This compares to a production rate from the field of almost 9 million barrels per month as recently as late 2014, prior to the internal strife that arrested flows.
OPEC’s decision on Nov. 30 to reduce production by 1.5 M/bpd to 32.5 M/bpd contained a proviso allowing for some countries to be exempt from the deal- including Libya- due to exceptional circumstances. Both Nigeria and Iran were also granted exemptions.
Libya reopened the Sharara field in December and the country’s total production stood at 650,000 bpd for the month. Mustafa Sanalla, the chairman of Libya’s National Oil Corp., told Bloomberg on Dec. 21 that production would reach 900,000 bpd early of year. By achieving that target, Libya would replace about one third of the supplies being reduced by other OPEC countries.