- Tankers must get East Libya government approval for loadings
- West Libya's National Oil declares force majeure at Zueitina
Libya’s oil output dropped below 400,000 barrels a day after the divided country’s internationally recognized government in the east closed a port run by a rival administration in the west, in a push to assert control over more energy assets and exports.
Production fell after crude exports halted at the port of Zueitina, Mohamed Elharari, a spokesman for the National Oil Corp.’s management in the western city of Tripoli, said Wednesday by phone. Libya pumped 430,000 barrels a day in October, data compiled by Bloomberg show.
Zueitina will be closed until further notice, and tankers seeking to load crude there must now register with a rival NOC management loyal to the internationally recognized government based in eastern Libya, according to a Petroleum Guard spokesman Ali al-Hasy. Vessels registered with the NOC administration in Tripoli, seat of an Islamist-backed government, are “illegitimate” and won’t be permitted to load at Zueitina, he said.
“This is clearly an escalation” by the eastern government to make buyers deal directly with their NOC management rather than continue to work with the Tripoli authorities, and thus gain more control over oil revenue, Richard Mallinson, an analyst at Energy Aspects Ltd., said by phone from London. “The more interesting question is whether there’s a risk of the same action being repeated at the other terminals under the control of the eastern government,” he said, referring to the ports of Hariga and Brega.
Libya, with Africa’s largest oil reserves, pumped about 1.6 million barrels a day of crude before a 2011 rebellion ended Muammar Qaddafi’s 42-year rule. Like the country’s leadership, the NOC has competing eastern and western administrations seeking to control energy facilities. Political strife and worker protests have curtailed output to about a quarter of what it was when Qaddafi was still in power.
Mallinson said output could dwindle to less than 100,000 barrels a day if Libya’s eastern government imposed restrictions at Hariga and Brega similar to those at Zueitina, in its drive to assert greater control over the OPEC state’s oil wealth.
“If they’re serious about this effort, that would be a logical next step, and it would risk shutting down more production,” he said.
The Tripoli-based NOC, which has been in charge at Zueitina, declared force majeure and said in a statement that the port was closed for all exports due to a “deteriorated security situation.” Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.
A tanker moored at Zueitina for two days has been prevented from loading, the port’s workers union president, Ramadan Lefkaih, said Tuesday by phone. Wintershall AG temporarily suspended crude exports from Libya’s As-Sarah field because Zueitina is unable to load cargoes, Stefan Leunig, a company spokesman, said by e-mail.
Zueitina resumed loadings on Oct. 5, boosting the country’s export capacity after a five-month halt due to protests, a port-workers union said at the time.
Libya’s internationally recognized government plans next week to ship a 1 million-barrel cargo of crude from Hariga, east of Zueitina, said Nagi Elmagrabi, chairman of the NOC’s eastern administration. The eastern NOC, with headquarters in the city of Bayda, has reached agreements with several companies to load oil at facilities under its control, Elmagrabi said Tuesday, speaking from Bayda.
Libya is currently the smallest producer in the Organization of Petroleum Exporting Countries.