Monday 23 October 2017

Libya Crude Oil Output Said to Fall 11% on Field, Port Closings

Libya Crude Oil Output Said to Fall 11% on Field, Port Closings
(Bloomberg 03/13/17)
Libya Crude Oil Output Said to Fall 11% on Field, Port Closings

Libya’s crude output dropped 11 percent as clashes among rival armed groups over the last 10 days led to the closing of some of the OPEC nation’s biggest oil export terminals, forcing a number of fields to halt production.

Output fell by about 80,000 barrels a day to 620, 000 barrels since fighting among armed groups broke out on March 3, according to a person familiar with the matter, who asked not to be identified because of a lack of permission to speak to media.

Es Sider, the country’s biggest oil port, and Ras Lanuf, its third-largest, remain closed, according to the person. Crude production halted at Waha Oil. Co., which pumps crude to Es Sider. Waha is a joint venture between the state oil company National Oil Corp., Hess Corp., Marathon Oil Corp. and ConocoPhillips.

The clashes dealt a blow to recent gains in the North African nation’s oil output. Exports had resumed from Es Sider and other facilities that were previously shut amid fighting in the country, which has Africa’s largest crude reserves. Output in February was about 700,000 barrels a day, almost double the level of the previous year, data compiled by Bloomberg show.

Force Majeure

Libyan authorities may declare force majeure at ports if clashes escalate in the area, the person said. Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. The status was imposed on the two ports in December 2014 when armed groups attacked the area, damaging storage tanks and infrastructure. It was only lifted about two years later.

Waha Oil has a capacity of more than 300,000 barrels a day, according to the NOC website. Its production dropped by half to 40,000 barrels a day after the closing of Es Sider port, before it came to a complete halt at the end of last week. The country has also been rescheduling crude loadings at Es Sider and Ras Lanuf and transferring them to other ports like Zueitina and Brega.

Libya is struggling to revive oil production amid political turmoil and conflict among forces competing to control its energy assets. The country is still pumping far less than the 1.6 million barrels a day it produced before a 2011 uprising that ushered in years of instability.

The Organization of Petroleum Exporting Countries exempted Libya from its agreement in November to cut output to end a global oversupply.

Salma El Wardany

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