Libya’s NOC declares force majeure on El Sharara oil exports

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FILE PHOTO: Pipelines are seen at the industrial zone at the oil port of Ras Lanuf, Libya January 11, 2017. REUTERS/Esam Omran Al-Fetori/File Photo
FILE PHOTO: Pipelines are seen at the industrial zone at the oil port of Ras Lanuf, Libya January 11, 2017. REUTERS/Esam Omran Al-Fetori/File Photo

Libya’s National Oil Company (NOC) on Monday declared force majeure on exports from the El Sharara oilfield after the facility was seized by local militia.

NOC said in a statement the shutdown of its biggest oilfield would result in a production loss of 315,000 barrels per day (bpd) at the site, and an additional loss of 73,000 bpd at the El Feel oilfield.

Production at the Zawiya refinery was also at risk due to its dependence on crude oil supply from Sharara, the company said.

“NOC demands that the group leave the oilfield immediately without pre-condition,” the statement said.

The state oil company said it was “reviewing” evacuation plans but did not say whether staff had actually left the site.

Before the force majeure, Libya had been producing up to 1.3 million barrels of oil a day, its highest level since 2013 when a wave of oilfield blockages started, part of turmoil since Muammar Gaddafi was toppled in 2011.

NOC said in a statement on Sunday that armed militia had stormed onto the premises on Saturday after some guards and locals claiming to be attached to the guard force had opened the gates.

In Libya armed men, often friends or relatives of existing guards, have regularly blocked oilfields to get added to the state payroll.

NOC “will not take part in negotiations with the militia or is willing to compromise following their decision to revert to violence, insulting language, and theft,” the company said in its statement.

Libya is divided and run by two weak governments and armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in annual oil and gas revenues.

Before the force majeure, Libya had been producing up to 1.3 million barrels of oil a day, its highest level since 2013 when a wave of oilfield blockages started, part of turmoil since Muammar Gaddafi was toppled in 2011.

Oilfield blockades like the current one tend to be solved by authorities quickly giving more money to guards or locals living close by to ensure they leave the site.

This blockade might be more complicated to resolve because the group that seized the facility included tribesmen, who have said they want development funds to improve hospitals and other state services which might take time to realise.