Uncertainty looms in Libya as PFG allows eastern oil ports to reopen
The Petroleum Facilities Guard of Libya’s eastern oil terminals said they will reopen the country’s key oil ports to allow the exports of some barrels from storage,
But the restart of a bulk of Libya’s crude oil production remains uncertain as the state-owned National Oil Corp. has yet to agree to terms with the PFG, sources close to the matter said Aug.19.
On Aug. 18, the head of the eastern-PFG, Naji al-Maghrabi, said the oil blockade which has been in place for seven months would be lifted to allow for the exports of stored fuel and gas to help alleviate power shortages gripping the country.
The eastern-PFG is loyal to the Libyan National Army and its leader Khalifa Haftar, and Maghrabi said Haftar had approved the reopening of five ports – Es Sider, Ras Lanuf, Zueitina, Marsa el-Hariga and Brega.
In a statement, Maghrabi said this decision was made to “preserve the production and export areas, as well as the existing oil installations, such as gas and oil tanks, pipelines, and exploration equipment.”
The North African oil producer has been wracked by conflict between the UN-backed Government of National Accord and the Libyan National Army of Khalifa Haftar that has almost completely halted oil output.
On Jan. 18, eastern tribes, supported by the LNA, halted exports from five key oil terminals, which dramatically reduced the country’s crude production, with most of the crude that was exported being loaded directly from Mediterranean offshore fields.
Crude production in Libya, which holds Africa’s largest crude reserves, has been slashed to around 70,000-110,000 b/d in the past few months from over 1.1 million b/d before the blockade.
A spokesman at NOC was unavailable for comment. But sources said NOC was expected to make a statement shortly as terms of the reopening of the ports were still being worked out.
“I heard from local agents [in Libya] that NOC are against a temporary reopening as they want a permanent solution,” a shipbroker said.
Hopes to restart Libyan production have faced several obstacles in recent months.
In mid-July, NOC said Libya’s oil output was poised for a gradual restart but the LNA halted those plans, and continued its demands on the redistribution of oil revenue.
Traders, however, remained skeptical on the immediate resumption of Libyan crude exports.
“It is too early to say – but the force majeure is [still] not lifted,” a source active in the trading of Libyan oil, said. “This announcement is pretty similar to last time [so not sure on the reality], but it will have to come back eventually.”
“It is tough to say if this will happen now – Libya has been out for too long. I think it will come back soon – maybe this time. We’re trying to find out [more] ourselves on the ground but nothing yet,” he added.
Libyan crudes are largely light and sweet, yielding a large proportion of middle distillates and gasoline, making it popular with refineries in the Mediterranean, Northwest Europe and China.
NOC chairman Mustafa Sanalla has previously accused foreign powers of meddling in the country’s oil sector, preventing the North African producer from restarting production.
The GNA is supported by Turkey and Qatar, while the LNA, led by General Khalifa Haftar, is backed by Russia, Egypt, the UAE and Saudi Arabia.