Wednesday, September 28, 2011

Sharara oil field will begin operating within 2 weeks.

LIBYA’s 400,000 barrel a day (b/d) Sharara oilfield will begin producing and sending crude up a pipeline to the refinery and export terminal in Zawiyah, west of Tripoli, within two weeks, according to facility operators. 

“There is nothing damaged,” Hussain Elhengari, managing director at Akakus Oil company, a joint-venture between Repsol and Libya’s National Oil Company, said of the oilfield. 

Worries over the safety of accommodation for workers at Sharara are preventing an immediate resumption of output, said Elhengari. A spokesman for Repsol, a minority shareholder in the project, said from Madrid that there was “no schedule” for the field. 

But on the ground, operators are confident output is close. Some of Muammar Qadhafi loyalists remain in Ubari, a small town southwest of Sebha, half way between the field and the refinery. But efforts to “clear” the area were underway and it could be safe to return in a week to 10 days, said Elhangri. 

Output from Akakus’s Sharara field accounted for about a quarter of Libya’s pre-war production, and is prized in international markets for its high, 43°API, quality. 

The pipeline and fibre-optic telecommunications cable running from Sharara to Zawiyah was in “perfect” condition, said Elhangri. In July, rebel forces shut a valve on the pipeline and cut the cable in two places – a tactical move that shut down the 120,000 b/d Zawiyah refinery and denied Qadhafi’s forces access to gasoline. Both have been fixed. 

Sharara’s near resumption, though, is just another example of a recovery in Libya’s oil sector that is confounding the predictions of analysts outside Libya. 

Several fields are already back on stream. The biggest is Arabian Gulf Oil’s (Agoco) Sarir field, southeast of Libya, which is now producing 160,000 b/d and is still ramping up. Production form the nearby Misla field, also operated by Agoco, is imminent, too, and could hit 100,000 b/d as its output speeds up in coming weeks. The two fields produced about 400,000 b/d before the war. 

Foreign operators Total and Eni are also back in business. The Italian firm said on 26 September it had brought back on stream 15 wells at the Abu Attifel fields, south of Benghazi, yielding about 32,000 b/d, or just under half of pre-war production. France’s Total is producing from the 40,000 b/d offshore Al Jurf field, too, though it hasn’t reached its capacity yet. 

Even fields that analysts said would be tricky to restart may prove easier than thought. 

The Waha complex, whose shareholders include ConocoPhillips, Marathon and Hess, produced 400,000 b/d from fields in the Sirte basin, in the centre of the country. The age of the fields, said some analysts, would mean production would only come back slowly, and need careful handling – probably by foreign experts. 

Nonsense, said Nasser Aljaly today in an interview with Petroleum Economist. He worked on the fields and is now chairman of Zawiyah Refinery Company (ZRC). The only real obstacle to Waha’s return is access to electricity to power the wells' pumps, he said, and generators would quickly solve that. 

Nor would it take even two years for the country to reach pre-war output, he said, citing the forecasts of pessimistic “analysts outside Libya”. By then, he said, the industry would be bringing on greenfield projects. Reaching 1.6 million b/d, the level before the uprising, would take less than a year, he added. 

None of Libya’s wells had been affected by the war – and damaged surface facilities would be fixed quickly, Aljaly claimed. 

Even though output from Libya is coming back on swiftly – with 500,000 to 1 million b/d now looking possible within months -- little of it is reaching international markets or, yet, earning much income for the fledgling government. mThat’s because until Sharara comes back on stream, Sarir’s output through the pipeline to Tobruk, in Libya’s east, is destined for Zawiyah. 

One 600,000 barrel cargo laden with Sarir crude will arrive at the plant on 29 September, said Khalifa Emhamed Sahli, ZRC’s general manager. On its way the ship will stop at Mellitah, west of Zawiyah, so the crude can be blended with some Mellitah oil to increase its API. 

On 30 September, one of Zawiyah’s two 60,000 b/d processing units will begin refining that crude into gasoline for the local market, easing Libya’s fuel import needs. If necessary, National Oil Company, the parent company of both Agoco and ZRC, will ship a second 600,000 barrel cargo to Zawiyah. 

One or two cargoes, said Sahli, would tide the refinery over until Sharara was on stream. After that, Tobruk’s Sarir and Misla exports will be for foreign markets. 

Even then, though, it won’t be a big earner for the National Transitional Council, because trading firm Vitol will claim cargoes in lieu of payment for shipments of gasoline it sent the rebels’ way during the war. But clearing that bill may take a lot less time than expected. 

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