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Pipeline from two Libyan oil fields 'reopens' but output hampered

A group of oil guards in Libya said on Thursday they had reopened a long blockaded pipeline leading from the major oil fields of Sharara and El Feel, but an oil worker said a separate group had prevented a production restart at El Feel.

The apparent agreement by a faction of the Petroleum Facilities Guard (PFG) in Rayana to open the pipeline after shutting it for more than two years has raised hopes of a major output boost from Sharara and El Feel, which together can produce more than 400,000 barrels per day (bpd).

But the strength and scope of deals to resume production from the fields is not clear, and officials and analysts say any increase to output is likely to be gradual and fragile because of technical problems and Libya's ongoing political turmoil.

The National Oil Corporation (NOC) has not confirmed any resumption of production at the fields.

Libya is one of two members of the Organization of the Petroleum Exporting Countries (OPEC) that is not bound by the bloc's pledge to cut oil production by about 1.2 billion bpd during the first half of 2017.

Its oil production has doubled to about 600,000 bpd since September, when the eastern-based Libyan National Army (LNA) took control of several blockaded ports and allowed the NOC to reopen them. But it remains far below the 1.6 million bpd Libya produced before its 2011 uprising.

While a jump in Libyan output is seen as one of the risks to the OPEC deal, continued political rivalries and conflict are likely to complicate efforts to bring output back towards past levels.

The NOC has said it hopes to raise production to 900,000 bpd in the near future, and to 1.1 million bpd next year.

It has been involved in negotiations with tribal leaders and armed factions for months to reopen a valve at Rayana, a town on the pipeline's route to the northern coast.

Mohamed Al-Gurj, a spokesman for the PFG faction in Rayana, said a valve had been reopened on Wednesday, after coordination between a PFG unit headed by Mohamed Basheer, an LNA commander in the nearby town of Zintan, and the NOC. The PFG and military officials had announced a deal on Wednesday.

But an oil worker from Mellitah Oil and Gas, which exports oil from El Feel, said a separate PFG group from the local Tebu ethnic group had prevented a restart there.

"El Feel oil field is not operating yet because the petroleum facilities guards from the Tebu who guard the field rejected the reopening," said the employee, speaking on condition of anonymity. "Although we carried out a start-up process last night, we were surprised by the PFG," he said.

An official from Sharara field, who also did not want to be named, said there had been no instruction to resume pumping oil there.

Mazen Ramadan, an adviser to Libya's UN-backed government in Tripoli, said the reopening of the valve at Rayana had been agreed with representatives from the nearby town of Zintan, following demands for local development and exemption from prosecution for blockaders.

But he said he was taken aback by the PFG announcement. "We contacted Zintan but they have denied that they have a unit of PFG with this name," he said.

There has been no production at Sharara since the Rayana valve was closed in November 2014, while El Feel continued some production until April 2015. The NOC said in September the pipeline closure had cost Libya $27 billion.

Output has also been interrupted in the past by rival armed factions present at Sharara and El Feel, including from the Tebu and Tuareg ethnic groups.

El Sharara is a joint venture between the NOC and Spain's Repsol, with a production capacity of about 370,000 bpd. El Feel is run by the NOC and Italy's ENI with a capacity of about 58,000 bpd.

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