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Libya, Nigeria oil output causes worries, geopolitical risks still present

Growing oil output in Libya and Nigeria is causing worries on OPEC’s ability to boost up crude prices.  Also, constant conflicts in the two nations might possibly keep a cap on their output.

Libya’s production came at levels higher than 800,000 bpd. It is the first time since 2014. Back then the civil war broke out. In the meantime, Nigeria is refreshing big infrastructure damages; caused by military attacks. Last year, they almost cut country’s production for 50%.

Libya

Libyan commander said to put out a power-sharing agreement, which will be beneficiary for country un every way. It will also have impact on oil supply. They have sent the General Khalifa Haftar to meet with UN-backed Prime Minister Fayez al Sarraj.

Still the ”risk officials” believe it won’t be easy to keep stability in next few months.

Impacted by these happenings, the firm projects oil exports will fluctuate between 500,000 and 700,000 bpd. Till the end of 2017.

Following, funding problems and a lack of foreign workers at the National Oil Corp is definitely going to limit the risk that oil output will boost.

Geopolitical risks still remain very high in Libya.

 Nigeria’s militants ended their attacks on infrastructure

Niger Delta Avengers, known as a Nigerian military group which attacks the infrastructure projects, now ended their ”operations”. And at the same time they allowed major pipelines to continue pumping crude oil again.

The militants earlier requested for a larger share of the nation’s oil wealth for Deltans. They now feel like they have a voice in the capitol.

Simultaneously, the non-military approach used by Osinbajo, which includes promises of development money, has undercut the case for militancy.

But President Muhammadu Buhari has been abroad for much of the year receiving treatment for an undisclosed illness. That creates a political opportunity for vested interests in Buhari’s inner circle, who are uncomfortable with the northern-born president’s relatively close relationship with his deputy. This could undermine militants’ trust in the capitol to the extent Osinbajo is marginalized. (CNBC reporter)

“At the moment it would be very difficult, but not impossible. I can’t see a path to that kind of outcome, but this is Nigeria,” said a Nigerian source.

RBC Capital Markets lists Nigeria at its highest geopolitical risk level, due to “the potential for a turbulent political transition.”

Exemptions continue?

Despite concerns about growing oil supply, there is no sign yet that OPEC will push Libya and Nigeria to turn off the tap when they meet next week.

The cartel could ask a production shutter similar to one given to Iran. Iran is allowed to raise outputs to a certain point. As it is rebuilding its energy industry, after years and years of crippling sanctions.

Nigeria’s oil minister said in January his country will consider reductions once its output returns to 1.8 million barrels a day, but he didn’t say how deeply it would cut.

“It remains to be seen whether there’s political will behind that.” Cheto said. “A lot of that will depend on whether Buhari consents to it.” (CNBC)

 

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Wintershall question retains Libyan oil output, as it tops 800,000 bpd

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Oil production in Libya

 

For the very first time since 2014, Oil production in Libya came to 800,000 bpd. Which makes it the highest level in 3 years. The info is from National Oil Corporation report which came out on Wednesday. The hack question of Wintershall, the German Oil film was stating that Libyan oil production closed at additional 160,000 bpd. The real Libyan output can reach the level amongst 1.1 million and 1.2 million bpd. Only in condition that officials are going to remove political obstructions. 

 

“Libya could produce between 1.1m to 1.2 million bpd. Regarding the period till the end of the year. This will happen only if Oil flows loosely & free. We require Serious National efforts.” (Mustafa Sanalla) He gave a comment on this subject for FT. Mr Sanalla is the chairman of Libya NOC.

 

Despite the output seriously recovering in forthcoming months, it still is at less than 1.6m barrels per day. These levels were normal in 2011, when M. Gaddafi crashed the uprising trends. Armed conflicts and political chaos destroyed the output trends which were smoothly but steadily rising in 2011.

 

OPEC

 

OPEC countries are planning a meeting on May 25th. That is a day when they will decide on whether to prolong output cuts. Knowing this, officials are watching Libyan outputs closely. While most producing countries have brought up the output cuts, Libya is released of these agreements. The inconsistency with Wintershall on the operator’s production will be put on Libyan state. (NOC) Also, the resulting debts have to go back to the levels from 2010. At least. These agreements have shut more than 160,000 b/d.

 

The NOC plans

 

The NOC plans to switch the concession agreement it has with Wintershall. About a production-sharing contracts, aiming to reduce the German company’s production share for more than a half. It considers that Libya, being under pressure from an oil price collapse, already is missing out on revenues of huge value that provide the spine of it’s economy.

UN Presidency Council government in Tripoli negotiated about the agreements on further (un)blocks in oil production. Which gave them a power to discuss on country’s agreements and deals with foreign companies.

 

Wintershall attitude

 

Crude Oil Exports form Zueitina Terminal were not loaded, so the state forced Company  to shutdown the production.

Zueitina Terminal location is in the Central Northern part of Libya on the Mediterranean Sea cost. It consists of offshore loading berths for oil tankers and LPG carriers. The main cargoes handled are crude oil, naphtha, butane and propane.

 

“It would not be an economic exploitation of the petroleum resources . . . to continue production without generating revenues but still being obliged to carry all production-related operational expenses.” (Financial Times)

 

Finishing, The Wintershall did not assign an export distribution since March, due to the previous disputes. (NOC)

“There is no claim over money allegedly owed by Wintershall. Wintershall has always met its obligations towards the Libyan state.”

“Our concession agreements with the state of Libya are still valid and in full force. We are in contact with NOC about a number of issues.”

In conclusion, Libyan Oil outputs have been affected mostly by country’s policies and agitated past which definitely has a deep consequences. As well as on Oil outputs, it affects every aspect of Libyan economy. It needs time to recover, and collaboration with foreign companies will help.

 

 

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