Libya’s NOC shuts down Zueitina oil port and Al Sharara field, warning of more closures

The oil company was forced to close its El Feel oilfield on Sunday because of political protests

The Zueitina oil terminal at Zueitina, west of Benghazi. The NOC said the closure of the port will affect cooking gas supplies in the eastern region and electricity production in Zueitina stations and northern Benghazi. Reuters
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Libya’s National Oil Corporation (NOC) shut down its Zueitina oil port in the north-east of the country and its Al Sharara oil field on Monday and spoke of “the start of a painful wave of closures” as political turmoil continues.

The company declared force majeure on exports from Zueitina port after a group of individuals entered and stopped employees from working, the NOC said in a statement on its website on Monday.

Force majeure refers to an unforeseen set of circumstances preventing a party from fulfilling a contract.

“Workers of the companies Zueitina, Mellitah, Sarir and Agoco on Sunday were forced to completely and gradually shut down production,” the NOC said, referring to its units that export through the Zueitina crude terminal.

In a later statement on Monday, the company said a "group of individuals put pressure on workers in the Al-Sharara oil field, which forced them to gradually shut down production and made it impossible for the NOC to implement its contractual obligations".

"Accordingly, the NOC is obliged to declare the state of force majeure on the Al-Sharara oil field until further notice."

The latest closures are expected to support oil prices, which are continuing to trade higher on supply concerns as a result of Russia’s military offensive in Ukraine.

Libya, an Opec member, produces about 1.2 million barrels of oil a day and is exempt from the Opec+ production deal because of security concerns.

Brent, the benchmark for two thirds of the world's oil, was trading at $111.62 a barrel at 3.36pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was at $106.73 per barrel.

The NOC said the closure of the Zueitina port will affect cooking gas supplies in the eastern region, as well as electricity production in Zueitina stations and northern Benghazi.

The company also stopped the production of crude oil at Abuatufol, Al Intisar, Anakhla and Nafura oilfields linked to Zueitina port and gas and condensate output from the Abuatufol gas plant, following the incident.

The North African country’s energy sector has faced several disruption in the last few days.

On Sunday, the NOC declared force majeure at its El Feel oilfield, also known as the Elephant field, after people entered on Saturday and disrupted operations.

“We urge the general Libyan people to support maintaining the flow of oil to the world markets and taking advantage of the current price boom,” NOC chairman Mustafa Sanalla said, while stressing the importance of “neutralising” the oil sector and avoiding political conflicts in the country.

Libya, which has some of the cheapest, largely sweet oil in northern Africa, has seen much of its production remain offline during the civil war that erupted between factions following the downfall of Muammar Qaddafi in 2011.

The country has had two competing governments since March and could again return to instability under rival administrations, the UN said last month.

In December, four oilfields in Libya, including El Feel, were shut down by gunmen of the Petroleum Facilities Guard, a force employed to guard oil installations, over the issue of pay.

At the time, the NOC said it would take legal steps against the strikers and condemned their actions.

Updated: April 19, 2022, 4:21 AM