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Libya Struggles To Restore Oil Supply Despite End Of Three-Week Blockade

Libya’s National Oil Corporation (NOC) has lifted the force majeure on crude exports from its western ports after militias ended a three-week-long blockade, but supply from the country is struggling to take off because of port closures in the east due to bad weather and a lack of storage tanks at terminals.

Libyan crude oil production slumped earlier this month to below 800,000 barrels per day (bpd), due to a blockade on four oilfields—including the country’s biggest field Sharara—and related export terminals in the west, and to an urgent repair on a pipeline that shut down 200,000 bpd output for several days.

NOC lifted the force majeure on crude oil exports at the Zawiya and Mellita ports in the west, Argus reported on Tuesday.

On December 20, Libya declared force majeure on its oil exports after crude oil production had been shut in from four of Libya’s oilfields, including the largest 300,000-bpd El Sharara field. Other oilfields that are shut in include El Feel, Wafa, and Hamada. The oilfields were shut in by members of the Petroleum Facilities Guard (PFG), which is tasked with protecting the oilfields. The PFG closed a valve on a pipeline going from Sharara to the Zawiya port, and another valve from Wafa to Mellita.

Libya’s oil production reached 998,000 bpd on Monday, a source at NOC told Argus. According to Bloomberg’s sources, output in the OPEC member exempted from the OPEC+ cuts was restored to 1 million bpd on Monday.

However, just as Libya partially recovered its oil production after the completion of the pipeline repairs, bad weather forced the closure of four oil export terminals in the east. This is a sign that Libya’s crude exports in January will be much lower than in November, the last month of relatively stable and normal operations at its oilfields and oil ports.

On Monday, all oil ports in Libya handling crude loadings were closed, while only Ras Lanuf in the east resumed operations on Tuesday, a Libyan shipping source told Argus. Sources tell media that weather conditions will be unfavorable until the end of this week.

At the same time, storage at terminals is limited and is forcing some producers to cut back on production volumes. Waha Oil Company was forced to reduce production by around 50,000 bpd due to a lack of storage at the Es Sider terminal, NOC said, adding that if bad weather persists, the reduction could reach 105,000 bpd.

By Charles Kennedy for Oilprice.com

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