(Bloomberg) -- Libya’s biggest oil field halted production on Monday after the operator was forced to gradually cut output over the weekend, according to two people familiar with the operations.
Output at Sharara in southern Libya has now stopped completely, down from nearly 270,0000 barrels on Saturday when employees received orders to trim output, according to the people, who asked not to be identified as they aren’t authorized to speak to the media. Oil prices rebounded following the news, with Brent crude paring an earlier loss to trade 0.72% lower at $76.26 a barrel as of 3:14 p.m. in London.
It wasn’t immediately clear what prompted the decision to curtail output. Libya’s internationally recognized government on Sunday said shutting the project was “political blackmail,” without elaborating. The North African nation is split between dueling administrations in the capital in the west, Tripoli, and a rival in the east.
The shutdown is the latest example of the security problems that have disrupted energy infrastructure for years. Sharara had a force majeure, a clause in contracts allowing deliveries to be suspended, lasting several weeks in January following demonstrations. The smaller Wafa field in western Libya and a natural gas link to Italy also had a brief halt in February following protests.
The African nation’s output reached almost 1.8 million barrels a day in 2008, before slumping to about 100,000 following the killing of Moammar Al Qaddafi in the 2011 civil war. It has been volatile ever since, although largely steady at about 1.2 million barrels a day in recent months.
Some local media said Sharara was closing because of protests over better socio-economic conditions, citing a letter from Akakus Oil, the operator of the field. Other news outlets attributed it to Saddam Haftar, the son of military strongman Khalifa Haftar who leads the Libyan National Army that controls the east and much of the south and has carried out blockades in recent years.
Sharara is a joint venture between Libya’s state oil firm National Oil Corp., France’s TotalEnergies SE, Spain’s Repsol SA, Austria’s OMV AG and Norway’s Equinor ASA.
(Updates with oil price in second paragraph.)
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