The largest oil trader in the world, Royal Dutch Shell, loaded a consignment of crude from Libya. This was the first such loading in five years, a sign that Libya is making a comeback as a leading oil producer. The cargo, which consisted of 600,000 barrels, was loaded from the country’s Zueitina port. A spokesperson for Shell declined to comment on the specifics only giving an evasive statement.
“… Shell International Trading and Shipping Company Ltd (STASCO) has a history marketing Libyan crudes. We welcome new business opportunities with Libya’s National Oil Corporation (NOC). However, we don’t comment on specific trading deals,” the spokesperson said.
Earlier this year Russia’s Rosneft PJSC and Germany’s Wintershall AG agreed to invest in Libya following signs of oil sector stability in the country following years of political division and civil war. Currently the North African country is not under obligation to abide by OPEC’s supply cuts.
According to sources Libya will only accept to sign an output limit agreement with other OPEC-affiliated producers once its daily production levels reaches a target of 1.25 million barrels and is certain the level can be maintained. The country expects to reach this level by December. In July oil production in Libya reached a daily output level of 1.02 million barrels. This was the highest level of output in four years.
Twelve years ago an exploration deal between the government of Libya and Shell was signed. In 2010 Shell revealed that the gas that had been found had not reached commercial quantities. After Muammar Al Qaddafi was toppled in 2011, oil production and exports fell drastically. At the height of its oil production boom in 2008, Libya was pumping over 1.78 million barrels of crude on a daily basis. But by 2011 the daily production levels had fallen to 45,000 barrels. Libya has the largest reserves of crude oil in Africa.
Libya’s rising crude oil production is coming at a time when OPEC is struggling to reduce a glut in the market in order to spur prices to higher levels. In recent weeks crude prices have been oscillating between $45 and $50 a barrel, which is 14% lower than the highest price this year. Most analysts now expect the chances of the price falling further to be higher than the chances of the price rising. It is understood that the shale boom from the United States is largely to blame for the failure of the OPEC cuts to work.