Agreement reached to lift Libyan oil blockade

The Libyan National Army (LNA) said it has reached an agreement with the rival Government of National Accord (GNA) and tribal factions to resume Libyan crude output after an eight-month blockade.

It remains to be seen whether Libya's state-owned NOC will restart production following this development, and it was not immediately clear if the LNA and GNA had agreed a finite or indefinite restart. Overnight, NOC said that the presence of foreign mercenaries at its oil assets prevented it from safely removing force majeure (FM) restrictions at this time.

The company has yet to comment since the LNA statement.

Factions affiliated with Khalifa Haftar's LNA — including Libyan tribes, the Petroleum Facilities Guard (PFG) that previously secured NOC's fields and terminals, Russian paramilitary group Wagner and Janjaweed forces — have intermittently shut down operations at all onshore Libyan fields and terminals since January. The offshore Al Jurf and Bouri fields have continued producing throughout. Mercenary forces remain posted at eastern ports, with a major presence at Ras Lanuf and Es Sider, according to Libyan sources.

Haftar today said it struck its accord to resume production with the GNA Presidency Council, represented by Ahmed Maiteeq. The two factions have been at war for control of Tripoli since April 2019, with the LNA receiving support from Russia, Egypt and the UAE, while the LNA has been sponsored by Turkey and Qatar. Recent nationwide civil protests against widespread power outages, corruption and the ongoing conflict have pressured both parties, leading to the resignation on 13 September of Abdullah al-Thani, prime minister of the eastern Libyan government that opposes the GNA.

A copy of the deal seen by Argus requires the immediate resumption of production and exports from all Libyan fields and ports, as well as the formation of a joint technical committee with members of both parties, to oversee the distribution of oil revenues. The accord also mandates support for NOC to restore production to "normal" levels.

The US embassy to Libya had heralded the potential agreement over the weekend, saying Haftar had agreed to lift the oil blockades by 12 September. Libyan crude exports and fresh production have yet to resume, as of today. The latest agreement — notably brokered by Maiteeq on behalf of the GNA — comes after the Tripoli administration leader, Fayez al-Sarraj, said he intends to resign by the end of October.

Without directly referencing the agreement, Libya's Central Bank (CBL) today said it "categorically denies" connections to any understandings about the distribution of oil revenues. The LNA has previously accused the Tripoli-based CBL of mismanaging NOC oil and gas revenues to sponsor mercenary offensives against Haftar. The latter refused the latest attempts to restart Libyan oil production in July, citing ongoing concerns over oil and gas funds. Since then, auditing firm Deloitte has begun a financial review of the Tripoli CBL and its eastern branch in al-Bayda.

Since mid-August, the LNA has allowed eastern ports to resume exports, limiting this concession to already stored crude and condensate. This frees up tanks, allowing NOC to continue associated gas production and alleviate some of the power outages.

By Ruxandra Iordache