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Libya Declares Force Majeure On Largest Oil Field

After a week’s blockade by a militant group, Libya’s largest oil field, Sharara, has been shuttered by a force majeure declaration by the National Oil Corporation. Reuters cited a statement issued by NOC, saying that production from the field will resume when “alternative security arrangements are put in place.”

This force majeure follows another one from last week that covered exports from the blocked field, which pumps more than 300,000 bpd, contributing almost a third of Libya’s national total.

The latest problems for the field, which has already become the target of several production interruptions this year, began a week ago. Initial reports said the blockaders comprised local tribesmen and members of the Petroleum Facilities Guard—the group that until two years ago held control of Libya’s four export terminals in the Oil Crescent, demanding payment from the government to allow crude to be exported, severely affecting production.

Later during the week things escalated when the PFG demanded money from the government to lift the blockade from Sharara. NOC’s chairman warned this course of action would be ill-advised.

Mustafa Sanalla said that if the Libyan Ministry of Finance paid the militants, this would set a dangerous precedent that would endanger Libya’s economic recovery. A day earlier, Sanalla said in a letter to the Prime Minister of the UN-recognized government of Libya that if a ransom was paid, NOC would not restart production at Sharara or lift the force majeure on the Zawiya export terminal and refinery, where the crude from Sharara goes, putting the government between a rock and a hard place.

"I want to be clear, this militia has to leave the field immediately,” Sanalla said in a statement last week. “We stand wholeheartedly with the people of the south and understand their concerns. At NOC we are doing all we can to improve the living conditions of the residents. Their legitimate demands and grievances however have been used by criminals who are only in pursuit of self-interest.”

By Irina Slav for Oilprice.com

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