- National Oil Corp in Libya Lifted the force majeure on oil fields and ports.
- Following this, another announcement on ending the oil export blockade was made.
- The end of the blockade could return over 1 million b/d of crude to the market.
- Hess to ship the first oil tanker with crude.
- The conflict between GNA and LNA led to $10 billion in losses in oil revenue.
- Countries that exceeded their quotas from May-August to have 2.375 million b/d of compensation cuts due.
Libya’s state-owned National Oil Corp. said Sept. 19 it had lifted force majeure on oil fields and ports, excluding facilities where militants are still present, a day after the Libyan National Army announced an end to an eight-month oil blockade, reports S&P Global Platts
The blockade on oil exports to be lifted
LNA leader Khalifa Haftar said Sept. 18 in a public broadcast that a blockade on oil exports in place since Jan. 18 would be lifted immediately, allowing for the potential return of up to 1.1 million b/d that Libya was pumping before the embargo and the release of crude in storage. The OPEC producer was pumping around 120,000 b/d before the lifting of the force majeure.
First Oil tanker to leave Libya with crude
The Minerva Eleonara is set to be the first oil tanker to leave Libya with crude since the force majeure on some ports was lifted on Sept. 19, according to data analytics firm Kpler.
The vessel will load almost 700,000 barrels of crude, destined for Europe on Oct. 4, after leaving from Es Sider port, the data showed.
NOC sold the crude to Hess, according to the data.
$10 bn loss in oil revenue over a conflict
The conflict between the Government of National Accord (GNA), which is supported by Turkey and Qatar, and the LNA, based in the east and backed by Russia, Egypt, the UAE, and Saudi Arabia, has hit the country’s oil industry and led to $10 billion losses in oil revenue, according to NOC estimates.
On Jan. 18, eastern tribes supported by the LNA halted exports from five oil terminals, sharply reducing the country’s crude production, which hit the lowest level since the 2011 civil war.
The force majeure was on crude loadings at terminals in Brega, Es Sider, Marsa el-Hariga, Ras Lanuf, and Zueitina.
Oil Revenue
The distribution of oil revenue has been at the heart of the blockade.
The LNA has previously named three conditions to lift the blockade:
- Opening a special bank account for oil revenue in an unnamed country outside Libya for equitable distribution of oil revenue
- Preventing oil revenue from funding “terrorism and mercenaries,”
- Auditing central bank oil revenue accounts over the past years.
Libya holds Africa’s largest proven reserves of oil and its main export crudes yield a large proportion of gasoline and middle distillates, making them popular with refineries in the Mediterranean and northwest Europe.
“We have seen this talk of force majeures being lifted many, many times before,” Mike Muller, director of oil business development and head of trading at Vitol Asia told a Gulf Intelligence webinar on Sept. 20.
“For as long as the key facilities both producing in the desert and the ports are occupied by mercenaries and forces that are not aligned with the GNA, it is not a given that this means we’re going to see production in Libya go from less than 100,000 to more than 1.2 million b/d.”
OPEC+ Coalition
The return of a potential 1.1 million b/d of Libyan crude to the market would complicate the OPEC+ coalition’s attempt to balancing an oil market still awash with oil and prices that are hovering around $40/b.
OPEC+ is currently in the midst of trimming its output by 7.7 million b/d, down from its historic 9.7 million b/d cut implemented May through July. Libya is exempt from output cuts.
Saudi energy minister Prince Abdulaziz bin Salman delivered a stern warning to OPEC+ compliance laggards, that failing to execute pledged production cuts was undermining the alliance’s efforts to rebalance the oil market.
In all, countries that exceeded their quotas from May-August have a cumulative 2.375 million b/d of compensation cuts due.
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Source: S&P Global Platts
