Libya has approximately 1mn bpd of production today and has claimed that it could approach 1.5mn bpd in the next few years, and ultimately much higher production by 2022, making the country a significant global oil producer.
The volatility in the country, however, means that oil production can be taken offline or come back online very quickly, in a span of weeks rather than months. Therefore, Libya (and the African region as a whole) drives significant swing changes and global volatility compared to more “stable” oil producers.
On December 17, General Haftar, Libya’s preeminent strongman and the leader of the Libyan National Army (“LNA”), proclaimed that the UN-brokered Libyan Political Agreement (“LPA”) had expired and that the Tripoli government has no more validity after two years of “illegitimate ruling.” He further declared that his army would no longer take orders from government bodies unless elected by the Libyan people.
The UN says that there are no articles in the LPA causing it to expire on December 17, 2017. However, Article No. 1/4 of the LPA states that the original term of the Government of National Accord (“GNA”) is for one year and is extendable by one additional year. The LPA was signed on December 17, 2015.
Regardless of who is correct, in legitimation crises, ink on paper often matters less than physical power, and Haftar has stated that the LNA will control the entire country by force pending proper elections (likely in the Spring as previously agreed).
Will violence ensue, and how will oil production be affected?
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As to the first question, we have an early answer: yesterday an unknown group assassinated the Mayor of Misrata, a supporter of the LPA and the Tripoli government. Will there be reprisals? Can Haftar maintain peace until elections? Only time will tell.
As to the second question about production, there will be lots of guesswork and waiting for news flow to alert the market about attacks on fields and pipelines. Genscape’s recently-released High-Frequency Libyan Production Monitor can answer production questions in near-real time. As shown in our first Libyan post, which was released before the Organization of the Petroleum Exporting Countries (OPEC) reported its November volumes, the Monitor leads news and agency reports, and provides highly accurate actual production levels for Libya.
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Going forward, Libya will remain volatile, and there will likely be conflicting news of violence comingled with reports that fields are hitting multi-year highs, such as Waha Oil Company’s statement on December 17 that it had reached 269kbpd of production. Genscape’s Monitor will cut through the noise and provide information about the reality of Libya’s production.
Genscape’s African Crude Oil Supply Report provides the most valuable, comprehensive window available into the current state of African oil supply. Using Genscape’s proprietary monitoring, Government and publicly available data, and imagery, the report combines an academic forecast and data science to provide a unique view of the rapidly changing oil-producing continent, with details for 26 countries and a specific focus on the conflict states of Libya, Nigeria, and Sudan/South Sudan. Click here to learn more about the African Crude Oil Supply Report.