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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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Libya Stops Pumping Oil

flaring

Libya’s National Oil Corporation has declared force majeure on crude oil loadings from two oil terminals, which effectively removed 850,000 bpd from the country’s production, Libyan media report.

“Despite our warning of the consequences and attempts to reason with the LNA General Command, two legitimate allocations were blocked from loading at Hariga and Zueitina this weekend. The storage tanks are full and production will now go offline,” NOC’s chairman Mustafa Sanalla said.

Hariga and Zueitina, like the rest of the terminals in the Oil Crescent, are controlled by the Libyan National Army, which handed control over them to the Benghazi-based NOC. Both are affiliated with the eastern government, which is not recognized by the UN.

On Saturday, the Benghazi-based NOC refused two loadings, one at Zuetina and one at Hariga, claiming the tankers waiting to load had not asked for its approval, which was now mandatory.

The LNA has controlled the Oil Crescent ports since 2016, but last month its grip on them was challenged by other groups led by a Petroleum Facilities Guard commander who is wanted by the Tripoli authorities for the two-year blockade of the ports.

Yet unlike in 2016, when it handed the ports to the Tripoli-based NOC, the LNA now passed control of the facilities to the Benghazi NOC, signaling that the divide in Libya between East and West is deepening instead of closing.

Lat week, the Benghazi-based NOC signaled it has no plans to compromise with the internationally recognized company, declaring, in addition to the mandatory approval for loadings, that all oil export revenues would go into an eastern-based central bank. Related: Why Oil Prices Are Surging

“We undertake that the money won’t go to someone shorn of legitimacy,” the head of the eastern National Oil Corporation said last week. “We have a central bank in (the eastern town of) Bayda, and it is recognized by the Libyan parliament,” Benghazi-based NOC’s head Faraj Said added.

Meanwhile, the EU and the UN have both called on the LNA and the Benghazi-based NOC to relinquish control of the oil ports and return them to the Tripoli-based company.

Sanalla said the Tripoli-based NOC had estimated oil revenue losses since June 14 at over US$650 million, with daily losses at US$67.4 million since the declaration of force majeure at Zueitina and Hariga.

By Irina Slav for Oilprice.com

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