After falling below 1 million barrels per day (bpd) last week, Libya’s oil production could be set for recovery above that mark again, as the National Oil Corporation (NOC) said on Monday that it had lifted a force majeure on oil terminal loadings.
Last week, the Arabian Gulf Oil Company, a subsidiary of NOC, said it had decided to halt production because of the delays in the budget that is planned to allocate money to the oil firm to repair and maintain infrastructure and keep oil production online. Arabian Gulf Oil Company is the operator of the oilfields Sarir, Mesla, al-Bayda, Nafoora, and Hamada, which, combined, can pump 300,000 bpd.
Days later, NOC declared force majeure on the port of Hariga due to lack of funds for infrastructure repairs, pushing the country’s crude oil production below 1 million bpd for the first time in months as NOC was forced to suspend production at several fields. The company blamed the shortage of funds on Libya’s central bank.
“While the National Oil Corporation understands the motives of the suspension which is outside the control of the company and seeks an excuse for the government of National Unity due to the delay in approving the budget for the year 2021, it places full legal responsibility on the Central Bank of Libya, which refused to liquidate the financial arrangements approved in accordance with the decision of the former Government of National Accord,” NOC said in a statement on April 19.
On April 26, NOC said it had lifted the force majeure on loadings from the Hariga oil terminal after reaching an agreement with the new unity government over the allocation of funds, Reuters reported.
The first unity government of the war-torn country since 2014 will extend US$223 million (1 billion Libyan dinars) as part of the agreement that ended the force majeure at Hariga, NOC said, as carried by Reuters.
Libya—exempted from the OPEC+ cuts—surprised many oil market observers, and probably the OPEC+ group itself, after managing in just a few months to restore its oil production back to 1.25 million bpd from less than 100,000 in September 2020, when an eight-month-long blockade on its oil ports ended.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- The Best Is Yet To Come For The World’s Hottest Oil Play
- Why Iran’s Return To Oil Markets Isn’t A Major Threat
- Oil And Gas Bankruptcies Jump Despite Rise In Crude Prices