We are now seeing the…
But shale giant ExxonMobil Corp.…
Continued clashes between the Libyan National Army and rival groups has cut the storage capacity at Ras Lanuf oil export terminal by 400,000 barrels, after a second tank was set on fire, Reuters reports, citing the National Oil Corporation.
The company also said the fire could spread to three other storage tanks, which would shut down storage at Ras Lanuf completely and lead to a suspension of exports. This would have a devastating effect on the Libyan oil industry, which had been recovering nicely, pushing 1.1 million bpd before attacks on fields and infrastructure became increasingly frequent.
The production expansion became possible after the LNA took control over the Oil Crescent with its four oil export terminals from the Petroleum Facilities Guard in September 2016. The army then passed this control into the hands of the NOC.
Now, it is being challenged by the Benghazi Defense Brigades—a group that the LNA drove out of Benghazi and is now trying to regain ground—and Petroleum Facilities Guard forces led by Ibrahim Jathran.
The clashes began last Thursday and by the next day, military sources were saying that the LNA had been driven out of Ras Lanuf and the bigger Es Sider export terminal. As of Friday, the decline in oil production resulting from the fighting at the ports stood at 240,000 bpd.
Related: Venezuela Forced To Shut Down Production As Operations Fall Apart
Now, with the latest tank fire, storage capacity at Ras Lanuf has slumped to 550,000 barrels because of the two tanks that were set on fire. The likelihood of the fire spreading is considerable as, according to firefighting sources, they were running out of foam.
Sources from the LNA told Reuters they were preparing a counter-offensive. Meanwhile, the NOC has called on Jathran to leave the two ports before more damage is done to the infrastructure there. The company has estimated that the PFG blockade of the four ports in the Crescent cost Libya billions in lost revenue from oil exports.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.