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Libya' s Zueitina oil port to reopen, force majeure revoked

GRANT SMITH and SALEH SARRAR

ZUEITINA, Libya (Bloomberg) -- Libya opened the way for oil exports to resume from the eastern port of Zueitina by revoking a legal clause known as force majeure after rebels returned the terminal to government control earlier this month.

The 70,000 bpd facility is ready to receive tankers for loading, Mohamed Elharari, spokesman of state-run National Oil Corp., said today in a text message. An agreement reached on April 6 provided for the rebels to hand over control of Zueitina and Hariga, two of the four ports they seized in July, in return for an official amnesty and salary payments claimed by defectors from Libya’s Petroleum Facilities Guard.

“It seems the government has been making a renewed effort for progress,” Richard Mallinson, an analyst at Energy Aspects Ltd. in London, said by email. “It still seems to be a complicated situation on the ground, and the market will want to see a cargo load to really confirm the terminal is operational again.”

The North African nation’s difficulty in exporting crude has contributed to support for North Sea Brent, a benchmark for half the world’s crude including Libya’s Es Sider grade, amid rising supply from Iraq and Iran. Libya, with Africa’s largest crude reserves, is struggling to restore output to the 1.6 MMbpd it pumped prior to the February 2011 uprising that toppled former leader Muammar Qaddafi.

Force majeure excuses a supplier from meeting its delivery commitments because of events beyond its control.

Brent crude futures erased gains following the NOC’s removal of the condition. Brent had advanced as much as 62 cents to $110.20 a barrel earlier today, and subsequently slipped to trade 39 cents lower at $109.19 as of 2:34 p.m. London time.

04/28/2014

 

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