Libya NOC lifts force majeure from ‘safe’ fields, ports

Libya's state-owned NOC said it has lifted force majeure measures from "safe" fields and oil terminals but will retain these restrictions for assets still allegedly infiltrated by foreign mercenaries and Russian paramilitary group Wagner.

NOC chairman Mustafa Sanalla said the company's priority is now to resume production and exports, while accounting for worker and operational safety, and preventing attempts to "politicize the national oil sector."

The company is conducting a technical evaluation to prepare for the restart of oil activities. It did not name the assets it would be targeting to return on line. But a Libyan shipping source said the Marsa el-Hariga and Zueitina terminals would likely be among the first ones restarted because of the lower mercenary presence.

Since January, all onshore Libyan crude oil fields and terminals have been intermittently blockaded by forces allied with Khalifa Haftar's Libyan National Army (LNA) — comprising the Petroleum Facilities Guard (PFG) units that previously guarded these assets, the Wagner group, Sudanese Janjaweed mercenaries and Libyan tribes. Foreign mercenaries remain posted at the Ras Lanuf and Es Sider ports, as of this week.

On 18 September, the LNA announced it reached an agreement to restart oil production and exports immediately with the rival UN-backed Government of National Accord (GNA), which Haftar's forces have battled for nationwide control since April of last year. On the GNA side, the accord was brokered and represented by deputy prime minister Ahmed Maiteeq, who represents the north western city of Misrata — leaving it unclear if further deal endorsement was required from other GNA parties. The deal duration was also not immediately apparent.

The Russian Foreign Ministry — which has backed Haftar in the civil conflict held Libya-linked talks with GNA ally Turkey in recent days — on 19 September said it welcomed the agreement. Last week, the US Embassy to Libya had foreshadowed the deal, announcing that Haftar had agreed to reopen the oil sector by the end of 12 September — a few days earlier than the LNA was able to achieve.

Argus estimates Libyan production has consequently stayed in the 80-100,000 b/d monthly average range since February, sporadically boosted by fleeting and failed attempts to restart production at various points during the summer. Most recently, the LNA opposed mid-July efforts to resume oil activity, citing concerns over the potential mismanagement of oil and gas revenues by Libya's central bank.

The LNA-GNA 18 September agreement tellingly mandates the creation of a joint technical committee with members of both factions, which will oversee the distribution of oil revenues. The make-up of this committee has yet to be disclosed but could lead to further friction if the two parties and the provinces they control conclude they are not fairly represented.

NOC on 19 September reaffirmed that the management of "Libyan financial affairs and the budgeting process" are outside its jurisdiction. The company had historically sought to maintain political neutral in the dispute.

Libyan exports volumes are likely to become available to the market immediately. NOC has said that it retains "hundreds of thousands of tonnes of hydrocarbons" in storage. In mid-August, the LNA allowed a restart of shipments of stored supplies from eastern ports, in an effort to free up stocks that will allow NOC to continue gas production and alleviate intensifying national power outages. The Marsa el-Brega port conducted exports of stored crude and condensate at the start of September.

Field production may lag, with NOC previously warning that the extended duration of the blockades had damaged pipelines and other infrastructure, which would slow down eventual output recoveries.

By Ruxandra Iordache