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Libya Lifts Force Majeure On Key Oil Terminal To Avoid Environmental Disaster

The National Oil Corporation (NOC) of Libya has temporarily lifted a force majeure it imposed on the Zueitina oil export terminal last month in a bid to reduce oil inventories and free up storage space.

“With the efforts of the loyal people of this country and in regular and continuous communication with the all parties, the Zouitina oil terminal has temporarily resumed work, to load two tankers and allow for enough space to store the displaced volume of the crude oil,” the NOC said in a statement.

The decision follows a warning by the NOC that the terminal’s closure risked an environmental disaster unless some of the oil stored at the terminal was removed to free up space for fresh output coming from the country’s oil fields. Additionally, some grades of crude require special storage conditions, including continuous heating, because of its high wax content. 

The latest force majeure on Libyan export facilities comes amid anti-government protests that have once again led to reduced production, notably at the El Sharara field, the biggest in Libya with a capacity to pump 300,000 bpd. Currently, El Sharara is producing 70,000 bpd, according to its operator, Spain’s Repsol, though the NOC has not confirmed this. 

Protests are directed at current interim Prime Minister Abdul Hamid Dbeibah, who has refused to step down and hand power to rival prime minister-designate Fathi Bashagha, creating parallel governments in Libya in a situation that could lead to renewed civil war. Bashagha’s backers, from the east, control much of the country’s oil production, while Dbeibah’s backers nominally control the oil revenues through the Central Bank in Tripoli in the west. 

"At a time when oil prices are recovering significantly due to increased global demand, which is being exploited by all producing countries to increase their oil revenues, the Libyan crude is being subjected to a wave of illegal closures, which will have serious damage to wells, reservoirs and surface equipment for the oil sector, as well as the loss of state treasury opportunities at prices that may not be repeated for decades to come," the National Oil Corporation said last month as it announced the closures of several export terminals.

These industry disruptions come as the NOC eyes a boost in production to 1.4 million barrels daily from 1.2 million bpd before the terminal closures began. The country has been exempted from OPEC production control measures because of its dire political situation that has prevented its oil industry from making the most of its resources.

By Irina Slav for Oilprice.com

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