A Review of the Nigerian Energy Industry

Libya seeks solution to oil export crisis

Libyan oil fields27 August 2013, Tripoli — A loss in oil export revenues has forced Libya to reconsider its hard-line approach to crippling labour strikes and partially rescind its “force majeure”.

Libya on Thursday (August 22nd) said that exports would resume at the Marsa al-Brega port in Tobruk. The same day, Libya’s navy fired warning shots at a Liberian oil tanker. Prime Minister Ali Zidan had threatened to shell any vessel that loaded oil without National Oil Corporation, NOC, contracts.

Following weeks-long protests by security guards that shut down port operations, Libya last week sought to avoid liability on oil export contracts by declaring “force majeure”.

But the ongoing strikes and port blockades have taken a heavy economic toll, according to Oil and Gas Minister Abdulbari al-Arusi. Libya since late July had “lost about $1.6 billion because of this closure”, he said.

“We have also lost many clients,” he said, noting that many had gone to other suppliers and filed legal actions. The halt in exports had also hurt workers, the minister added.

“The lost production will affect revenues, which have already dropped by 20 per cent,” Deputy Oil Minister Omar al-Shakmak told Magharebia.

He urged all parties to stop the sit-ins at ports and oil fields.

“Oil is not for one geographical area, political entity or group; rather, it’s for the entire Libyan people, and here lies the solution,” al-Shakmak said.

“Negotiations are under way between civil society organisations, tribal dignitaries, local organisations, energy committee in the General National Congress and government,” he said.

Production last week had actually increased by some 50,000 barrels per day, al-Skakmak said. “These are indications of a positive response to avoid more losses,” he said.

The Libyan economy has paid a price for the labour actions at oil production and export sites, NOC Chairman Nouri Balrwin confirmed.

“Losses incurred due to strikes since the beginning of this year are estimated at $4 billion,” Balrwin said.

And despite progress at the Brega facility, the ports of Zueitina and al-Sidra – Libya’s largest – remain closed.

“I fear that oil will be dragged into political disputes, although it is a resource for all Libyans,” oil engineer Kamal Ben Issa said.

“We thought things would be better, that the oil sector would be developed, more refineries would be built, cadres would be rehabilitated and areas developed. However, those people are impeding all this,” he told Magharebia.

Libyans need to end such self-destructive practices, Tripoli civil society activist Amal al-Ghool said.

“Those who attack ports and oilfields are assaulting state revenues and budget,” al-Ghool said. “How do they expect building and construction when they are strangling the economy?”

– Maghrebia

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