Libya’s National Oil Corporation lifted a force majeure on its oil exports that had been in place for six months, allowing the Opec producer to resume shipments.
However, the state oil company said an increase in production would take time as oil facilities had suffered “significant damage” due to a blockade imposed in January by troops under the command of Field Marshal Khalifa Haftar in the eastern part of Libya.
The North African producer declared a force majeure – an unforeseen set of circumstances preventing a party from fulfilling a contract – in January.
It has suffered $6.5 billion (Dh23.87bn) in lost production and incurred additional costs required to rebuild infrastructure, NOC chairman Mustafa Sanalla said.
“The costs of repairing the pipeline network and surface equipment and of well workovers will run into the billions of dinars,” he said on the company's website. “For NOC, the work has just started. Our infrastructure has suffered lasting damage, and our focus now must be on maintenance and securing a budget for the work to be done.”
Much of Libya's production has remained offline during the civil war that erupted between rival factions after the downfall of Muammar Qaddafi in 2011.
Production, which stood at about 1.75 million barrels per day, fell by 850,000 bpd in the years that followed as protests and blockades prevented the export of crude oil through the country’s key ports.
In an interview with The National in 2018, Mr Sanalla said the country, whose oil is largely sweet and among the cheapest in northern Africa, needed $60bn to develop its upstream and downstream sectors amid plans to raise its refining capacity to one million bpd. Libya will load its first crude oil shipment from Es Sider oil port, the NOC said.
The lifting of the six-month force majeure comes amid calls for a ceasefire in the country.
Fighting between various factions in Libya led to the closure of several oil facilities to avoid further damage.
The return of Libyan oil to international markets comes at a time when Opec+, the producer alliance undertaking market corrections, is cutting back 9.7 million bpd until the end of the month. Tapered cuts are in place until April 2022.
The North African producer was exempted from the Opec+ cuts due to it suffering a significant loss in production as a result of political unrest.
Mr Sanalla has previously called for an exemption from production restrictions and said the country had the right to recover its lost output.
The joint ministerial monitoring committee of the Opec+ alliance is set to convene on Wednesday to discuss how producers have complied with the pact.
Resumption of supply from Libya is expected to add to a glut on the market.
Oil prices, however, closed on a positive note on Friday. Brent, the international benchmark for more than half of the world’s crude, settled 2.1 per cent higher at $43.24 a barrel while West Texas Intermediate, which tracks US crude, closed 2.35 per cent higher at $40.55 a barrel.