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Libya’s oil production set back by pipeline explosion

Libyan oil production was hit on Tuesday December 26 as a section of a pipeline exploded 81 miles south of Sidra. The pipeline transports crude to the Es Sider terminal, the country’s largest export terminal, and is likely to cause a decline in production of 70,000 to 100,000 bpd (barrels per day).

The pipeline is operated by the Waha Oil Company, which is a joint venture between Libya’s National Oil, ConocoPhillips, Hess Corp., and Marathon Oil Corp. On the Wednesday following the attack, Waha announced on its website that the explosion had been caused by a “sabotage act” and that security had cleared the company to attend the site. Bloomberg quotes unnamed sources as saying that it will take about a week to repair the pipeline.

The occurrence of a new act of sabotage will hit the country’s recovering oil production, which stood at 1.6 million bpd in 2010. Production subsequently dropped in the light of civil war, blackouts, disruptions from protesters, and unpredictable shutdowns, although a relatively stable security situation enabled the country to get production back to about a million bpd this year. Under the most recent OPEC agreement, Libya and Nigeria need to limit their combined output to no more than 2.8 million bpd.

Many international oil companies have been slow to start operations in Libya given the security situation. ExxonMobil, the maker of high-performance gas engine oils like Mobil Pegasus 1, returned to Libya in 2005 following the lifting of US sanctions but later evacuated all its expatriate employees amid the 2011 Libyan Civil War.

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