Concerns over delayed Libyan crude prices

Libyan state-owned oil firm NOC has yet to issue the official formula prices for its February-loading crude, compounding existing concerns over the reliability of the country's exports and the quality of some of its cargoes.

Libya's term buyers are usually allocated their cargoes between the start and middle of the month that precedes loading, which means they tend to nominate crude volumes without knowledge of the formula prices, but this month's price release is more delayed than usual.

Since last year's port and field blockades began to be lifted in mid-September, NOC has been issuing its prices in the first six days of the loading month. The prolonged wait this month has raised concerns among buyers about the final outright settlement price of their February cargoes. Vortexa data show just under 10mn bl of Libyan crude has already been exported this month, and some loading dates have begun to surface for March trade.

NOC sets the formula price for its light sweet grades as a differential to the average of the North Sea Dated benchmark over the calendar loading month. For its sour supplies, the firm uses a differential to Russian Black Sea Urals. Libyan prices are often discounted to those of rival crude suppliers, factoring in the high risk of disruption to exports because of frequent industrial or military action in the north African country.

A dispute over pay has prompted factions of the Petroleum Facilities Guard (PFG), which usually protect NOC's assets, to threaten strikes at the Ras Lanuf, Es Sider and Marsa el-Hariga terminals since late January. Marsa el-Hariga ended up being closed for over two weeks because of the dispute until the wage demands were met yesterday. Shipping reports show the port is now open, and Vortexa data indicate the tanker Front Cruiser is set to load 1mn bl from the terminal on 14 February.

Mercury rising

Libyan exports have also been the subject of quality concerns in recent weeks. Last month NOC issued a tender to sell January-loading cargoes of its Bu Attifel and Zueitina grades that contained unusually high levels of mercury. Traders said NOC has since awarded a Bu Attifel cargo with a mercury content of 93 parts-per-billion to trading firm Vitol, loading from the Zueitina terminal on 7-8 February, although that has not been confirmed by either company.

One market participant suggested that the Bu Attifel crude reportedly awarded to Vitol was not produced recently. Traders are divided on whether any fresh output has high mercury levels. Some say supplies are no longer affected. Others are more circumspect and point to the fact that NOC has not fully allocated Bu Attifel to term customers in February or March. A Libyan source said the mercury problem in the Bu Attifel stream has yet to be entirely resolved.

By Ruxandra Iordache