Libya’s National Oil Corporation lifted force majeure on crude exports from all its key terminals, paving the way for a gradual restart of its crude production, the state-owned company said on July 10.
NOC, however, cautioned that the output recovery would take a long time “due to the significant damage to reservoirs and infrastructure” caused by the port blockade which had been in place since mid-January.
NOC had been in talks with regional countries and the Government of National Accord under the supervision of the UN and the US to restart oil output, and sources said a “temporary arrangement” had been agreed.
“For NOC, the work has just started. Our infrastructure has suffered lasting damage, and our focus now must be on maintenance and securing a budget for the work to be done,” NOC Chairman Mustafa Sanalla said. “We also must take steps to ensure Libya’s oil production is never again held to ransom.”
The North African oil producer has been racked by conflict between the UN-backed GNA and the self-styled Libyan National Army of Khalifa Haftar that has almost completely halted oil output.
On January 18, eastern tribes — supported by the LNA — halted crude exports from five of Libya’s key oil terminals, which dramatically reduced its crude production.
This led NOC to declare force majeure on crude loadings out of Marsa el-Hariga, Brega, Es Sider, Ras Lanuf, Zueitina and Zawiya. Force majeure from all these ports have now been lifted.
Libyan crude production had been slashed to around 70,000-100,000 b/d in the past few months, from over 1.10 million b/d before the blockade.
Sanalla has previously warned of permanent damage to the country’s oil sector from both a budgetary and technical perspective, which will have severe repercussions on its future output capacity.
The oil blockade has cost the country more than $6.5 billion in revenues from lost production, and NOC is also under serious budgetary constraints, which will affect the maintenance of its oil infrastructure.
“NOC faces huge extra costs to repair infrastructure damage. The costs of repairing the pipeline network and surface equipment and of well workovers will run to the billions of dinars,” Sanalla said.
Sanalla said the closure of several of Libya’s oil fields had affected the oil reservoir quality, which had suddenly undergone mechanical, structural and chemical changes
NOC also said is currently loading a tanker from the Es Sider terminal, which will make it the first export out of this key 350,000 b/d in almost six months.
The Aframax Kriti Bastion was at the Es Sider terminal as of the morning on July 10, according to data from Platts cFlow, trade flow software.
This is NOC’s second attempt to load a tanker from Es Sider after the Delta Ocean was turned back when its entry to the port was blocked by the Petroleum Facilities Guards.
The process of unlocking Libyan crude oil remains challenging, especially with the presence or mercenaries and armed groups at its key oil terminals.
Libya holds Africa’s largest proven reserves of oil and its main light sweet Sharara and Es Sider export crudes yield a large proportion of middle distillates and gasoline, making it popular with refineries in the Mediterranean region and Northwest Europe.