* NOC aims to bring output to 900,000 bpd by March
* Deals to free pipelines involve multiple parties
* Political scramble still major risk to production
By Aidan Lewis
TUNIS, Dec 22 The reopening of western Libya's
main oil pipelines puts ambitious production targets within
reach, but the shadow of an unresolved conflict and the risk of
new blockades hang over potential output gains.
Just four months ago, Libya's output was languishing under
300,000 barrels per day (bpd), a fraction of the 1.6 million bpd
the OPEC member had been producing before its 2011 uprising.
Now valves on pipelines from the major oilfields of Sharara
and El Feel have been opened and the NOC says it can push output
from 600,000 bpd currently to nearly 900,000 bpd by March.
That could upset plans by the Organization of the Petroleum
Exporting Countries to bolster global prices - Libya along with
Nigeria was exempted from a recent pledge to cut production -
but it would provide relief for a country driven to the brink of
economic collapse by a drastic fall in oil revenue.
"This is the first time for three years that all our oil
will flow freely," NOC Chairman Mustafa Sanalla said. Workers
cheered as gas flares were lit on Wednesday at Sharara, which
has a capacity of 330,000 bpd.
The NOC said no money changed hands and no backroom deals
were made to open up the pipelines.
It has warned that production restarts will be gradual,
because infrastructure across the country has been damaged by
fighting and neglect.
But the deal is also seen as fragile, the result of tortuous
negotiations with local groups around the northwestern town of
Zintan, close to where the valves had been shut.
It is just one example of how the NOC has to try to navigate
the tangled web of political and armed factions that have vied
for power in Libya since a 2011 uprising.
Even after a faction of Petroleum Facilities Guard (PFG)
announced the reopening, it was six days before the NOC
officially confirmed it, reflecting concerns that the pledge
would not be fulfilled.
An official at El Feel said a separate faction of the PFG
from the Tebu ethnic group had been obstructing operations
there. A Libyan oil industry source said that was still the case
"These negotiations take multiple groups and multiple actors
to move things," said Claudia Gazzini, Libya analyst for
International Crisis Group. The PFG, which is meant to be a
national force, has splintered into sub-groups with conflicting
"It's still a very fragile oil and gas structure. Reopening
one valve doesn't give any guarantee that production will
restart in the fields," said Gazzini.
The broader threat to oil production comes from an
unresolved power struggle involving the U.N.-backed Government
of National Accord (GNA) in Tripoli and allies of military
commander Khalifa Haftar based in the east.
In September, Haftar's forces prised four ports in Libya's
Oil Crescent from a PFG commander, Ibrahim Jathran, who had
aligned himself with the GNA.
The blockade was lifted, oil production more than doubled to
600,000 bpd, and Haftar's allies confirmed their physical
control over most of Libya's oil resources.
Oil revenues, however, have continued to be paid to the
central bank in Tripoli, which is under pressure from Western
states to release regular funding to the GNA.
If it does so, analysts say Haftar's allies in the east may
shut down the Oil Crescent ports once more, rather than seeing
substantial income go to rivals in Tripoli.
That could bring the western pipelines under threat as well.
Though Zintan is internally divided, the faction that opened the
valve is aligned to Haftar's Libyan National Army.
Another worry for the NOC is that eastern power-brokers
repeat past, failed attempts to sell oil independently.
With international support, the NOC and the central bank in
Tripoli have retained control over oil production and revenues.
But their relationship with the GNA is shaky and breakaway
branches of both institutions continue to operate in the east,
where officials complain that the country's much reduced oil
wealth is not being shared out fairly.
On Saturday, as the deal to reopen the pipeline hung in the
balance, the NOC's Sanalla put out a statement complaining that
nearly six years after Libya's revolution, the problem of how to
manage and distribute the country's oil wealth had never been
If oil continued to be exploited politically, Libya still
risked a "tragic end" to its recent period of conflict, he said.
"This issue reveals the size of the gulf separating us from
a political solution."
(Editing by Patrick Markey and Susan Thomas)