Libya’s Oil Industry and its Importance

Libya was a major oil-producing country before the civil war. In recent years, the country started struggling to support its oil industry. Before the civil war, daily output was 1.6 million barrels per day; nevertheless, Libya’s production failed to return to this level, according to shipbroker Gibson’s latest weekly report.

Gibson’s report contains many interesting details about the country’s oil market. The Mediterranean Aframax market has the chance to benefit from a potential recovery of Libya’s oil production. The country has one of the largest oil reserves not only in Africa but also around the world. 

The local oil industry and its problems

At the moment, OPEC and its allies, together known as OPEC+, are struggling to boost production across the board, and oil prices continue to rally. Thanks to Libya’s oil industry, it is possible to boost production. 

So, it is very important to help the industry. For a long time, the Mediterranean Aframax market played an important role when it came to the country’s oil industry. Since 2015, 

Mediterranean Aframax market’s share has averaged 68% versus 32% for Suezmaxes. Nevertheless, it fell from 62% from 2018 onwards as Suezmaxes became more popular. 

However, its share bounced back to 70% in January and 81% in February, indicating a growing appetite for Aframax tonnage for Libyan cargoes as increasing volumes are shipped across the Mediterranean to France and other countries. 

In the first month of the year, the El Sharara oil field was producing 290kbd, a utilization rate of 97% and just 10kbd below its full capacity of 300kbd. However, the country has to deal with a number of issues. So, the recently postponed election and appointment of a second Prime Minister in the eastern region can affect the situation. This lack of stability means the target of increasing capacity to 2.1 million barrels per day over the coming years will be difficult.