Libya and Nigeria’s oil production bloom and pose a threat to OPEC deal

The Opec agreement reached between member countries last month is expected to face many hurdles in the coming days including rise in production from Nigeria and Libya, analysts said.

Both Nigeria and Libya have been exempted from the Opec deal that was reached between the group’s member countries on November 30 as their production was affected due to militancy and unrest.

According to Opec monthly report released on Wednesday, Libya’s oil production has gone up from 528,000 barrels of oil per day (bpd) in October to 575,000 bpd in November, an increase of more than 47,000 bpd.

Libya is also set to open its largest oilfields and its biggest export terminal.

“With Libya reopening two of its largest fields and its biggest export terminal, the ability to double production (by 500,000 to 600,000) has become quite a bit easier to achieve,” Ole Hansen, head of commodity strategy from Saxo Bank told Gulf News.

The two large fields that are set to open are Sharara, Libya’s largest oilfield, and the El Feel deposit run by Eni SpA. They will soon start pumping crude to the Zawiya refinery and the Mellitah energy complex after pipelines reopened on Wednesday, according to a report by Bloomberg.

And the first cargo from Libya’s export terminal Es Sider is due to leave on Friday. This will be the first overseas shipment of oil from Libya’s biggest export terminal since 2014.

Opec member countries reached a historic deal on November 30 to cut production by 1.2 million barrels of oil per day from January. Non-opec members will also contribute by reducing their output by 558,000 barrels of oil per day.

Oil prices went up by more than 15 per cent following the deal with brent crude jumping to seventeen month high of $57 (Dh209) per barrel. However, oil prices fell on Wednesday after the interest rate hike by the US government.