Libya lifts crude force majeure but output constrained

Libya's state-owned NOC has lifted force majeure restrictions on crude exports from the western ports of Zawia and Mellitah, but supply from eastern terminals has come under pressure from scant storage capacity and weather-related restrictions.

NOC imposed force majeure at the ports on 20 December, the same day the Petroleum Facilities Guard (PFG) that typically protect NOC assets shut production at the El Sharara, Hamada, El Feel and Wafa fields. The production cuts briefly removed a third of Libyan output, bringing it to below 800,000 b/d at one point. Production was 998,000 b/d yesterday, according to an NOC source.

Zawia and Mellitah respectively ship out the Esharara crude grade and the Mellitah blend that results from combining El Feel crude and Wafa condensate. Lifting the force majeure measures was critical for NOC to begin allocating February supplies, a trader said.

Libya's crude supply recovery may prove to be short lived because of the eastern port closures and because damage sustained during the civil war has limited storage capacity, forcing NOC subsidiaries to lower output when export outlets close for a longer stretch of time. All crude-loading Libyan terminals were closed yesterday, and only the eastern Ras Lanuf resumed operations today according to a Libyan shipping source. Weather conditions are forecast to remain unfavourable until 15-16 January.

NOC said its Waha Oil subsidiary in eastern Libya has lowered production by 50,000 b/d — it typically produces between 280,000-300,000 b/d that contributes to Libyan flagship grade Es Sider. A Libyan shipping source said Waha Oil production dropped to 260,000 b/d earlier today from 280,000 b/d yesterday. NOC said Waha output could fall to as little as 105,000 b/d if weather-led disruptions persist. It did not provide a timeline for this, but the shipping source said Es Sider storage tanks, as of last night, are 32 hours away from filling completely.

Waha Oil output has fluctuated recently because of pipeline leaks and maintenance.

By Ruxandra Iordache