Libya’s crude production will rise above 1mn barrels a day in the next four weeks after the nation reopened the last of its oil ports, according to the state energy firm.
The National Oil Corp said on Friday it lifted force majeure – a clause in contracts allowing deliveries to be suspended – at the eastern ports of Es Sider, Libya’s biggest export terminal, and Ras Lanuf. It’s safe to restart operations after months of shutdowns because foreign fighters involved in the country’s long-running civil war have left the areas, the company said in a statement.
The Al Nafoura and Amal fields, which feed Ras Lanuf and have a combined capacity of around 90,000 barrels a day, have already restarted, people familiar with the matter said.
The rapid resumption of Libya’s oil production following a truce has put added pressure on crude prices, just as a resurgence of the coronavirus saps demand for energy. Brent crude dropped 1.6% to $41.77 a barrel on Friday, extending its decline in 2020 to 37%.
Warring parties in Libya signed a permanent ceasefire agreement on Friday, which should bolster the NOC’s efforts to increase oil output. Representatives of the United Nations-recognised government in Tripoli and eastern military commander Khalifa Haftar – whose forces blockaded most oil fields and ports in January – struck a deal after talks in Geneva. The rival sides are set to meet next month in Tunisia to appoint a unity government that will prepare elections.
Libya’s daily production was less than 100,000 barrels before Haftar lifted his blockade in September. It was 560,000 this week and will reach 800,000 within a fortnight, the NOC said. The company won’t be able to pump at last year’s levels of around 1.2mn barrels a day due to damaged infrastructure and budget constraints, it said.
If Libya’s daily output does rise to 1mn barrels as quickly as the NOC says, it will make the task of Opec+, which is trying to curb supplies and bolster prices, even harder. The alliance of the Organisation of Petroleum Exporting Countries and partners including Russia meets next month to decide on production policy.
The group is weighing whether to delay a plan to ease production cuts in January. Even its worst-case analysis of the market didn’t anticipate such high output from Libya – an Opec member that’s exempt from the curbs because of its strife – until late 2021.
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