Libya's state oil company moved on Tuesday toward resolving a dispute that could help the country's crude output soar. But a regional crisis over Qatar has spilled over into Libya, putting at risk political reconciliation between the nation's rival factions and a tentative rebound in its oil production.
Libya's National Oil Corporation (NOC) and German oil and gas company Wintershall have agreed to an interim arrangement to resume production in Libya, the NOC said on Tuesday, a step forward in a dispute that was shutting in up to 160,000 barrels per day (bpd) of output.
NOC said the deal would allow production to begin immediately in Wintershall's concession areas in eastern Libya.
It said it was targeting an increase in national production to 1 million barrels per day (bpd) by the end of July from 830,000 bpd currently, following restarts at Wintershall's fields and other fields where output has been blocked because of pipeline connections.
The agreement "provides that during this interim arrangement, the parties will attempt to resolve their dispute regarding the legal framework governing the petroleum operations," the NOC said in a statement.
The announcement came after OPEC said its own output rose by 336,000 bpd in May to 32.14 million bpd led by Nigeria and Libya, two members exempt from the supply reduction deal. OPEC on Tuesday said a long-awaited rebalancing of the global oil market was under way at a "slower pace."