A recent report by Oil Price pointed to the continued impact of Libya’s political and security turmoil on the country’s oil sector. This comes despite a ramp-up in production to 1.2 million barrels per day and ambitious plans to further boost output.
The forced closure of the giant Sharara oil field by protestors highlights the obstacles still facing the revival of Libya’s oil industry. The NOC declared force majeure on Sunday after demonstrations demanding better economic conditions, cutting 370,000 bpd.
At the crux of these protests is anger over poor economic conditions under Abdel Hamid Dbeibeh’s interim government and accusations of corruption. The oil blockade also relates to an unresolved political crisis over the equitable distribution of oil revenue among Libya’s factions.
Rival administrations headed by Dbeibeh and Prime Minister Osama Hammad have attempted maneuvers to redirect oil income, including replacing the NOC chairman. But Dbeibeh’s disputed legitimacy, with his refusal to hand over power and conduct elections, has bred more divisions.
Dbeibeh’s government also faces protests by southern municipalities over economic policies and living standards. Popular grievances continue to impact operations, like at Sharara, despite urgent needs to grow production.
While progress was made in the gas sector, political instability severely constrains Libya realizing its oil output goals. Greater policy consensus and eased social tensions will be key to reviving production. Free and fair elections could unlock the political deadlocks and restore public trust.