Libya moved closer to reopening its battered oil industry after the state energy firm said it would resume exports, though only from fields and ports that are free of foreign mercenaries and other fighters.
The National Oil Corp is ending force majeure – a legal status protecting a party if it can’t fulfil a contract for reasons beyond its control – at “secure” facilities and has told companies to resume production. The shutdown would continue elsewhere until militias leave, the NOC said in a statement on Saturday.
Some firms that use or operate the Opec member’s eastern ports announced they were restarting work. They included Arabian Gulf Oil Co, which can produce almost 300,000 barrels a day and exports them from Hariga port, and Sirte Oil & Gas Production and Processing Co, which runs the Brega terminal.
It was unclear whether militias would move out of major fields such as Sharara in the south-west, which was occupied by mercenaries earlier this year. The NOC said last week it would be dangerous to start pumping oil again with armed forces in close proximity.
Sharara, the country’s largest field, has yet to restart, according to a person familiar with the matter. The NOC is assessing security at different oil fields and is receiving reports from all facilities, the person said. Oil facilities have been at the heart of Libya’s civil war, with different groups closing or sabotaging them to press political and economic demands.
The nation is home to Africa’s largest crude reserves.
Force majeure “continues in fields and ports where the presence of fighters from Wagner and other armed groups that hinder activities and operations is confirmed,” the NOC said.
The NOC’s announcement came after Khalifa Haftar, a commander who controls eastern Libya, said on Friday he would lift a blockade his forces imposed on fields and ports in January.
Haftar said his move was conditional on oil revenue being shared more evenly between the eastern administration and the UN-recognised government based in Tripoli, the capital, in the west.
Haftar’s blockade caused Libya’s crude output to plummet to less than 100,000 barrels a day from around 1.1mn.
Any additional supplies from Libya would enter the market at a time when the Organization of Petroleum Exporting Countries and partners such as Russia are curbing production to bolster oil prices. Brent crude has fallen almost 5% this month to $43.15 a barrel, extending its coronavirus-induced loss in 2020 to 35%.
Libya was exempt from the Opec+ cuts, first agreed in April, because of its strife.
Even if work resumes soon at most Libyan oil facilities, there’s no guarantee the country can ramp up production quickly or significantly. Energy infrastructure is crumbling after almost 10 years of conflict and chaos following the ouster of former dictator Muammar Gaddafi in 2011. NOC chairman Mustafa Sanalla told Bloomberg in June that it would cost more than $100mn to fix wellheads alone. The lack of basic, nuts-and-bolts servicing has left pipelines corroding and storage tanks collapsing.
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