Libya piles pressure on OPEC, resumes crude pumping after two weeks shutdown

Libya’s largest oil field resumed production after a halt of more than two weeks, putting pressure on OPEC and other producers seeking to rein in a global supply glut and firm up prices.

Libyan authorities reopened a valve on the pipeline from the southwestern Sharara field to the Zawiya refinery after they reached a final agreement with a militia group that had closed the link, according to a person familiar with the matter, who asked not to be identified because the information is private. The pipeline’s reopening allowed Sharara to resume output, the person said.

State-run National Oil Corp. accused the group earlier of closing Sharara, El-Feel and Hamada oil fields since Aug. 19. NOC lifted the force majeure legal status that had been declared at Sharara and El Feel and which protects a company from liability if it can’t fulfill a contract for reasons beyond its control, the person said. El-Feel, also known as Elephant, and Hamada resumed production last week, other people familiar with the matter said at the time.

The North African nation’s crude output dropped 35 percent after the forced closing of the three fields, disrupting a revival of its production and exports. However, the decline helped ease the burden on the Organization of Petroleum Exporting Countries and allied suppliers as they seek to strengthen their accord to cut output. Libya, like its fellow OPEC member Nigeria, is exempt from the global production cuts because of internal strife.

The NOC has blamed a militia organization it called the Rayayina Patrols Brigade for the disruptions, including the Aug. 19 shutdown of the pipeline valve that curbed Sharara’s output by 283,000 barrels a day. Sharara, with a production capacity of 330,000 barrels a day, is run by a joint venture between the NOC and Repsol SA, Total SA, OMV AG and Statoil ASA.

Libya, which holds Africa’s largest crude reserves, was pumping 1.6 million barrels a day before a revolt in 2011 set off years of fighting among rival governments and militias. The nation’s output had reached a four-year high of 1.01 million barrels in July, according to data by Bloomberg.