Libya oil production drops as fighting spreads to third oil port


Libya oil production drops as fighting spreads to third oil port


TRIPOLI, Libya (Bloomberg) -- Libya’s oil output fell below its own consumption as fighting spread to Mellitah, a region that hosts the country’s fourth largest oil port.

National Oil Corp. already this month declared force majeure at two export terminals, Es Sider and Ras Lanuf, after an attempt by Islamist militias to capture them. Force majeure is a legal status that protects a company from liability when it can’t fulfill a contract for reasons beyond its control.

National Oil reported clashes in the Mellitah area, Libya’s westernmost oil port, without indicating whether loadings were stopped. Sitting on Africa’s largest oil reserves, the North African country produced about 1.6 MMbpd before the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule.

“National Oil Corp. is following with deep concern the events that happened over past two days in the region of Mellitah and their implications for the oil and gas complex,” the NOC said in a statement on its website. It also said it’s unable to fulfill natural gas exports contracts to Italy.

The U.S. Energy Information Administration estimates Libya’s consumption was 239,000 bopd in 2013. The last estimate of the country’s production, on Dec. 15, was 350,000 bopd, according to two people with direct knowledge of upstream operations.

Divided Libya

Libya is divided after its internationally recognized government, led by Abdullah al-Thinni, sought refuge in the country’s eastern region after Islamist militias took over Tripoli about five months ago. Omar al-Hassi set up a rival government in the capital with the backing of Islamist militants. Thinni announced plans this month to assert his government’s control of oil payments made by foreign companies, prompting the Islamist forces backing his rival to try to seize the oil terminals protected by the Petroleum Facilities Guard.

“The current picture of ports and producing facilities is a harbinger to dangerous consequences should the crisis not be solved soon,” NOC said, and called on rival forces to “spare the petroleum industry, the livelihood of all the Libyans.”

The fighting near Mellitah also affected gas exports to Italy, by curbing gas production at the offshore Bahr Essalam field, one of the two reservoirs that feed the sub-sea pipeline that takes the fuel across the Mediterranean Sea. The other field is Wafa, onshore, according to documents on the website of Eni Spa, the Italian pipeline operator.

Italian Supplies

NOC is “unable to fulfill contractual commitments toward partners in international markets,” it said. It didn’t indicate if gas exports to Italy have come to a halt or whether some production is continuing.

The country has nine oil export terminals, of which two, Jurf and Bouri, are offshore and relatively immune to the fighting. Zawiya, the second-largest, and Zueitina, the sixth largest, are not exporting because they’re not receiving crude from fields upstream as a result of protests or military clashes, according to the last update by NOC on Dec. 15.

NOC hasn’t clarified the status of the other oil ports at Mellitah, Brega and Hariga.

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