Libya to resume production and exports from secure fields and ports
Blockades have resulted in lost oil production worth $6.5bn since the start of the year
Libya is expected to resume production from fields and export crude from ports that are secure, the country’s state oil company said on Saturday.
The National Oil Corporation said a force majeure in place will be eased across “oilfields and ports that are secure”.
Force majeure refers to an unforeseen event outside of a party's control that prevents it from fulfilling its obligations under a contract.
Libya tentatively lifted a six-month long force majeure in July to resume oil exports.
However, the ports were closed a day later after forces allied to Field Marshal Khalifa Haftar called for an equitable distribution of oil revenue across the country.
In a televised address, he said the resumption of production would help mitigate electricity shortages by directing more fuel to power plants.
Blockades have resulted in lost Libyan oil production worth $6.5 billion (Dh23.87bn) since the start of the year and led to an increase in the cost of rebuilding infrastructure, according to the NOC.
Much of Libya’s oil production was affected by the civil war that led to the overthrow of Muammar Qaddafi in 2011.
Production, which stood at about 1.75 million barrels per day before the conflict, fell by 850,000 bpd in the years that followed as protests and blockades prevented crude exports from leaving the country’s ports.
Libya produced 1.2 million bpd in 2018 and 2019, with its output dwindling to a mere 106,000 bpd in August, according to Opec's secondary sources.
Earlier this month, oil firms affiliated with the NOC halted some work on their fields and sent workers home after the country recorded a surge in coronavirus cases.
Arabian Gulf Oil Company, an affiliate, suspended work for 30 days to “protect workers from the pandemic”, the NOC said.
The country’s largest refinery, Zawiya, put a tenth of its employees on emergency leave.
The companies said the move was precautionary and not brought on by an outbreak among staff.
However, a spokesman for Al Waha Company said on Twitter that the oil companies and the refinery were expected to resume operations.
Oil markets have been cautiously assessing the possible return of Libyan barrels to the market. However, analysts have suggested the return of Libyan oil production is unlikely to impact markets due to the small amount of exports.
On Thursday, Opec+ sounded a strong note to markets and short sellers saying the alliance led by Saudi Arabia and Russia will "never leave the market unattended”.
“I want the guys in the trading floors to be as jumpy as possible,” Saudi Arabia’s energy minister Prince Abdulaziz bin Salman told reporters.
The group said in its communique that it would take “further necessary measures when needed”.
Oil prices were trading below $40 per barrel for a week before the Opec+ meeting.
However, the emphasis on compliance and Opec+'s show of unity helped push prices up. Brent, the international benchmark for crude, gained 8.3 per cent last week to settle at $43.15 per barrel on Friday, while West Texas Intermediate, the key US gauge, finished 10.12 per cent higher to $41.11 per barrel.
Updated: September 20, 2020 11:49 AM