Libya’s Biggest Oil Port Shut, Crude Output Cut on Clashes

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A Libyan fireman stands in front of smoke and flames rising from an oil storage tank at an oil facility in northern Libya's Ras Lanouf region on January 23, 2016, after it was set ablaze earlier in the week following attacks launched by Islamic State (IS) group jihadists to seize key port terminals. Firefighters battled the blaze at the oil facility for a third day, an official said, after an assault by jihadists aiming to seize export terminals. / AFP / STRINGER (Photo credit should read STRINGER/AFP/Getty Images)
  • Oil exports from Es Sider, Ras Lanuf ports halt on fighting
  • Country’s crude output said to fall to 650,000 barrels a day

Libya halted exports from two of its biggest oil ports and reduced production from some fields after clashes threatened to reverse the North African country’s progress in reviving crude output and sales.

The country’s production fell to 650,000 barrels a day from about 700,000, according to a person with knowledge of the matter, who asked not to be identified due to lack of authorization to speak to news media.

Crude shipments from Es Sider, the nation’s largest oil port, and Ras Lanuf, its third-biggest, have been suspended until security improves and workers return to the facilities, Jadalla Alaokali, a board member of Libya’s National Oil Corp., said by phone. Production from fields feeding the ports has declined and may be cut further if the two terminals remain shut and the situation doesn’t improve soon, he said.

The Benghazi Defense Brigades, a militia not allied to the United Nations-backed government in Tripoli, seized the Es Sider terminal on Friday, according to people with knowledge of the situation, who also asked not to be identified because they aren’t authorized to speak to the media. The facility had previously been under the control of eastern-based military commander Khalifa Haftar.

The clashes jeopardize the surge in Libya’s oil production after output and exports had resumed from Es Sider and other facilities previously blockaded by fighting between armed groups. Production in February was almost double the level of a year ago, data compiled by Bloomberg show. Libya holds Africa’s largest crude reserves.

Workers Evacuated

The country may reschedule crude loadings at Es Sider and Ras Lanuf and transfer them to other ports like Zueitina and Brega, another person with knowledge of the situation said, asking not to be identified for lack of permission to speak to media. Es Sider was scheduled this month to ship four cargoes of 630,000 barrels each, according to a copy of a tanker-loading program obtained by Bloomberg.

The NOC sees no need for now to declare force majeure at Es Sider or Ras Lanuf, said Alaokali, the company’s board member. Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

“We are against any actions that could damage the oil infrastructure in the country including oil fields, pipelines, ports, plants and other petroleum facilities,” NOC Chairman Mustafa Sanalla said in a statement posted Saturday night on the company’s website.

Libya has been boosting its production, resuming shipments from key ports after months of conflict. The more it pumps, the greater the pressure on other members of the Organization of Petroleum Exporting Countries to curb supply in order to eliminate a global oil glut. Libya produced 1.6 million barrels a day before a 2011 revolt sparked fighting that prompted foreign investors to withdraw.

 

 

Bloomberg

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