Libya resuming oil exports from some major ports

*A worker maintains oil pipelines at the Zueitina oil terminal in Zueitina, west of Benghazi April 7, 2014.REUTERS/Esam Omran Al-Fetori

*A worker maintains oil pipelines at the Zueitina oil terminal in Zueitina, west of Benghazi. REUTERS/Esam Omran Al-Fetori

16 September 2016, Benghazi, Libya — Libya is resuming oil exports from some of its main ports which forces loyal to eastern commander Khalifa Haftar seized in recent days and has lifted related “force Majeure” contractual clauses, the National Oil Corporation (NOC) said on Thursday.

The north African nation is highly dependent on hydrocarbon revenues and needs oil exports to resume to save its economy from collapse. Conflict since Libya’s 2011 uprising has reduced its oil output to a fraction of the 1.6 million barrels per day the OPEC member once produced.

“Exports will resume immediately from Zueitina and Ras Lanuf, and will continue at Brega … exports will resume from Es Sider as soon as possible,” NOC Chairman Mustafa Sanalla said.

He said Libya’s U.N.-backed government in Tripoli and a parliament based in eastern Libya both backed reopening the ports which have been controlled by forces loyal to Haftar since Sept 11-12.

Haftar has been an outspoken opponent of the Government of National Accord (GNA) in Tripoli, and his seizure of the four ports from a rival force aligned with the GNA had raised fears of fresh conflict over Libya’s oil resources.

“NOC is in charge of the ports,” Sanalla said on Thursday, a day after visiting Zueitina. “They are secure, and we have been in contact with our foreign commercial partners.”

A Reuters reporter at Zueitina saw large numbers of military vehicles and men belonging to a guard force allied to Haftar’s Libyan National Army (LNA).

Western powers had condemned Haftar’s seizure of the ports and had said they were ready to prevent any exports attempted outside the GNA’s authority.

“(This) had the potential to escalate, with potentially devastating consequences for the nation and our petroleum industry,” Sanalla said.

“Instead, we have found a shared interest in letting the oil flow, and the wisdom of that decision needs to be recognized.”

U.S. Libya envoy Jonathan Winer called reports of the LNA handing over control of the ports to the NOC a “promising development”, writing on Twitter that increased oil production could have an “immediate positive impact”.

Libya could raise output to 600,000 barrels per day (b/d) within a month and to 950,000 by the end of the year from about 290,000 currently, Sanalla said this week, but he said NOC would need new funds and blockaded pipelines in southwest Libya would need to be reopened.

Declaring “force Majeure” allows an oil supplier to break a contract because of circumstances beyond its control.

TANKER ARRIVES
A port official at Ras Lanuf said a tanker had docked to load crude on Thursday, the first to do so since at least 2014, and that a second tanker had docked at Brega, which has remained open.

Both were arranged before the LNA seized control of the ports, the official said. In July, the Petroleum Facilities Guard force that was previously in control of the ports struck a deal with the GNA to reopen Es Sider, Ras Lanuf and Zueitina, which it had long been blockading.

On Thursday, oil production also resumed at the Nafoura oilfield which was shut in November 2015, an oil official said. The field previously produced 25,000-30,000 b/d.

Es Sider and Ras Lanuf ports have been damaged by militant attacks and fighting. Officials at Zueitina said it was in good condition, though only about 130 out of 550 workers had returned to their posts.

Libya’s internationally recognized parliament relocated to the east of the country in 2014 after armed rivals took control of Tripoli.

The GNA, set up in Tripoli in March is meant to replace competing parliaments and governments in Tripoli and the east, but has failed to win endorsement from eastern factions aligned with Haftar.

He is a former ally of late dictator Muammar Gaddafi and has expanded his power over the past two years, waging a military campaign against Islamists and other opponents.

On Wednesday the head of the eastern parliament promoted him from general to marshal. He is distrusted by many in the west of the country who see him as a new military strongman in the making.

Tripoli’s NOC, led by Sanalla, signed a unification deal in July with a rival NOC set up in Benghazi in the east that is loyal to pro-Haftar factions.

A currency trader said the Libyan dinar had strengthened from more than 5 dinars to 4.15 dinars to the dollar on the parallel market in Benghazi on news of the oil ports opening.

*Ayman al-Warfalli; Aidan Lewis & Julia Payne; Aidan Lewis; editing – Keith Weir & Dan Grebler – Reuters

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