How can satellite imagery reveal what’s really happening in Libya’s oil sector these days?
The last few weeks have seen a remarkable turn of events. A blockade that caused the industry’s collapse in 2020 was partly lifted by rebel commander Khalifa Haftar. Oil production has reportedly increased, and could keep rising, if the situation holds.
That’s big news for Libya and the global oil market. The prospect of additional Libyan supply at a time of weak demand is already weighing on oil prices.
There’s a thirst for information about Libya, but gaining reliable information using traditional methods is difficult. Satellite imagery provides an alternative source, as detailed below.
Let’s start with the question of production.
Ursa Space can monitor oil production using flaring data obtained via satellite. The volume of gas flared provides a proxy for production that can be used to gauge trends and tell whether fields are operating or not.
Figure 1 shows Libya’s daily flaring volume (blue line) from January 2018 to September 28, 2020.
There was a notable rise in late September, consistent with reports of increased production.
That marked a clear break from the rest of 2020 when flaring volumes plummeted and stayed low.
Less flaring corresponded with the sharp drop in Libyan oil production in 2020 (black line). Oil production fell from more than 1 million barrels per day (bpd) in December 2019 to less than 100,000 bpd by March.
The catalyst behind the collapse was the blockade of key oil ports in January, an attempt by Haftar to starve the rival Tripoli-based government of oil revenue.
Haftar’s recent decision to lift the blockade mid-September paved the way for production to restart.
Three eastern oil ports—Tobruk (Hariga), Brega, Az Zuwaytinah—reopened by the end of September, allowing production to resume at oil fields feeding those terminals.
Libya’s oil production almost tripled to 250,000 bpd since the partial lifting of the blockade, Bloomberg reported this week.
The majority of Libyan oil fields have yet to show an uptick in flaring volumes. Those that did were mostly in the Sirte Basin.
For example, the amount of flaring at Nasser and Raguba jumped after being dormant for most of 2020 (Figure 2).
Even if ports remain open, it will take time for production to reach full capacity because of the repairs needed to fix wellheads, pipelines and storage tanks.
Another question is security. Libya’s state-owned National Oil Corporation (NOC) says foreign mercenaries aligned with Haftar’s forces have occupied key energy facilities.
As long as that’s the case, then a full-fledged restart of Libya’s oil fields won’t be possible.
Libya’s largest oil field, El Sharara, remains shut for this reason, along with the ports of Sidra and Ras Lanuf.
Control of El Sharara has been hotly contested by rival factions vying for the financial windfall accompanying the 300,000 bpd field in southwest Libya.
Figure 3 shows El Sharara’s flaring volume since July 2018. The three periods when flaring drops to zero (or almost zero) correspond to times when Sharara was known to have gone offline.
There has been a minor uptick the last few days, though the flaring volume is still quite low, making it too early to conclude that a restart has begun.
This leaves plenty of room for more production to come online. Goldman Sachs analysts forecast Libyan production will reach 550,000 bpd by the end of the year.
One factor that will boost initial exports is that of crude inventories, Goldman says. Tankers loading oil from reopened ports can tap storage tanks, but this won’t last long without oil flowing from the fields to terminals.
How much oil is in storage? The answer can again be found in satellite imagery.
Ursa Space measures global crude inventories, including in Libya, using satellite-based, synthetic aperture radar (SAR).
Our Libya coverage includes two sites near Tripoli (Mellitah, Az Zawiya), four sites along the Gulf of Sidra or “Oil Crescent” (As Sidr, Ras Lanuf, Brega, Az Zuwaytinah) and Tobruk (aka Hariga) near the Egyptian border.
Monitoring these inventories will also provide clues whether the pace of exports can continue. If tanker shipments deplete inventories, then loadings will likely slow.
Our latest measurements, for the week ending October 1, show 5 of the 7 sites above 50% capacity utilization. Tobruk and Zawiya were less than half-full.
Libya’s crude inventories have been relatively full compared with previous years. For the four weeks ending October 2, inventories in 2020 averaged 8% more and 11% more than the same period in 2019 and 2018, respectively.
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We’ll continue to follow the events in Libya as they unfold. Check back here for updates.