Libya oil exports to resume at key ports as OPEC meets on supply

By Salma El Wardany on 6/21/2018

VIENNA (Bloomberg) -- Libya’s state oil company plans to start exporting again “soon” from two of the country’s biggest oil ports after eastern military commander Khalifa Haftar retook control of the terminals following clashes with a rival military force.

Mustafa Sanalla, chairman of the National Oil Corp., said Thursday in an interview in Vienna that he expects the ports of Es Sider and Ras Lanuf to be operating normally in less than a week. Es Sider is Libya’s biggest oil export terminal, and Ras Lanuf its third-largest.

“It will take a couple of days for workers to be back in the field, work on fixing the damage and resume operations,” Sanalla said. He made his comments a day before OPEC members were to meet to re-consider their 18-month policy of cutting output, with Russia and other allied producers, to clear a global glut. The Organization of Petroleum Exporting Countries has exempted Libya from the cuts due to the nation’s civil strife.

Libya, with Africa’s largest crude reserves, lost about 400,000 bbl of daily oil production due to the clashes last week, highlighting the continued threat from armed forces for whom energy installations are prized targets. The NOC declared force majeure on shipments from the two Mediterranean ports last Thursday and said damage at Ras Lanuf had cut storage capacity there by 40%.

Tumultuous years

After days of fighting, forces allied to Haftar’s self-styled Libyan National Army were in full control of both facilities and were grouped in the town of Ben Jawad, 50 km (31 mi) west of Es Sider, said Omran al-Hamali, spokesman for Brigade 302, which helps secure the ports. The NOC last week evacuated staff from both terminals.

In the seven tumultuous years since the ouster of former leader Muammar al-Qaddafi, militias and other armed groups vying for influence in Libya have repeatedly attacked oil installations and caused ports to shut. The nation’s crude output is little more than half what it was before Qaddafi’s downfall, causing a dearth in foreign-currency reserves and a large fiscal deficit. Libya pumped 990,000 bpd in May, data compiled by Bloomberg show.

Haftar restored oil exports from Es Sider, Ras Lanuf and other facilities in 2016 after wresting control of them from another armed group that had blockaded the installations for two years. The stoppage had devastated the economy and exacerbated political divisions.

Libya is targeting a boost in daily production to more than 2 MMbbl by 2020 and hopes to be a sustainable supplier for Europe in the near future, Sanalla said in a speech at a seminar in Vienna organized by OPEC.

“Political instability, however, is a key threat to our oil sector,” he said. 

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