This Nation’s Very Serious Political Crisis Halts Oil Supply

• Gulf of Sirte includes Es Sider, Brega, Ras Lanuf and Zueitina ports
• Force majeure could be declared in in 72 hours, says NOC chairman
• Production has fallen by almost a half since May when oil blockades began

A recent news article published in the Platts states that Libya’s NOC close to halting oil exports from Gulf of Sirte, says situation is ‘very serious’.

Key eastern oil terminals

Libya’s state-owned National Oil Corporation is on the verge of declaring force majeure on oil exports from its key eastern oil terminals as the country’s political crisis is now affecting a large chunk of the country’s oil supply.

“We are considering declaring a state of force majeure within the next 72 hours unless production and shipping are resumed at the oil ports in the Gulf of Sirte,” NOC chairman Mustafa Sanalla said in a statement on June 27. “We are facing a recurring reality. There are closures in the Gulf of Sirte region, and there are those who are trying to demonize the oil sector in the capital, Tripoli, but we will not stand idly by, but will confront them in accordance with the legal frameworks.”

The Gulf of Sirte includes four main oil export terminals with a total capacity of 630,000 b/d – Es Sider (250,000 b/d), Ras Lanuf (200,000 b/d), Brega (90,000 b/d) and Zueitina (90,000 b/d).

This comes as almost a half of Libya’s oil production is now offline as tensions between the country’s two rival governments have escalated in recent weeks, with both jostling for power and oil revenues.

Oil exports from the Es Sider and Marsa el-Hariga terminals

Oil exports from the Es Sider and Marsa el-Hariga terminals and production from the 200,000 b/d Sarir field have already been severely disrupted in the past few weeks due to a series of blockades.

But NOC had not yet declared force majeure as shipments from these ports were being carried out sporadically.

However, Sanalla has now said “the situation is very serious,” sounding an alarm that a large chunk of Libya’s key oil infrastructure is at risk from the current crisis.

Political fallout

The protestors who are leading the oil blockades have been calling for the removal of the Tripoli-based Government of National Unity and a revamp of the political process.

The Libyan National Army, which supports the east-based Government of National Stability, has backed these protests. The LNA, led by Khalifa Haftar, controls most of Libya’s oil and gas infrastructure but does not control sales and distribution of revenue.

Libya’s crude production

Libya’s crude production has remained much below its current capacity of 1.2 million b/d in recent months. The North African country saw its output slump to a 16-month low of 770,000 b/d in May, according to the latest Platts OPEC+ survey from S&P Global Commodity Insights

Platts Analytics expect Libyan crude supply to average 600,000 b/d in June, roughly half of capacity, assuming partial production at the Sharara and Agoco fields, and falling volumes at Waha fields.

“An agreement was not reached at UN-mediated talks on June 19, and hopes are low for progress between the two rival governments at next week’s round. Meanwhile, General Khalifa Haftar is shutting oil supply for political leverage,” they said in a recent note.

Relations between the GNU and GNS

Relations between the GNU and GNS have worsened in recent months.

GNU Prime Minister Abdul Hamid Dbeibah has refused to cede power to GNS Prime Minister Fathi Bashagha. In mid-May, Bashagha failed to take control of the country’s capital Tripoli.

The country’s oil industry has been at the mercy of groups vying for the control of valuable assets since the 2011 civil war, with attacks on key pipelines and production facilities.

Libya holds Africa’s largest proven reserves of oil and its main light sweet Sharara and Es Sider export crudes yield a large amount of middle distillates and gasoline, making it popular with refineries in the Mediterranean region and Northwest Europe.