Last month, Libya’s UN backed Tripoli government was reported to have signed a deal with armed factions controlling the major Ras Lanuf and Es Sider oil ports in an attempt to end the export blockade, which has been in place since December 2014.
These two ports have a combined export capacity of around 600,000 barrels per day, which could significantly elevate Libya’s crude production from the mere 300,000 barrels per day in July, Gibson shipbrokers said in a recent report. Two other major oil export terminals, Zawiya and Zuetina also remained closed.
Five years ago, before the ousting of the Gaddafi regime, Libya was producing 1.6 mill barrels per day, which provided steady support for the cross Mediterranean Aframax market.
The deal to reopen Ras Lanuf and Es Sider was reported to have been signed in early July between the National Oil Corp (NOC) and the Petroleum Facilities Guard (PFG), set up by the rival Eastern Government.
According to NOC, the plan is to quadruple (from what level?) the country’s oil exports by the end of the year, although thus far there has been no sign of any increased liftings at any of these ports.
Details of the actual deal are very sketchy, but the UN backed Government of National Accord are reported to have said that the deal included an “unspecified amount for PFG salaries” and the NOC Chairman Mustafa Sanalla has complained about rewarding groups that have the ability to shut down these ports.
Clearly, there remains a lack of trust of the PFG. Sanalla cited previous broken promises and facilitation payments, which have failed to improve oil exports. The Eastern Government has been accused several times about selling oil outside of the official structure.
In April, a cargo of around 650,000 barrels of crude was loaded at the east Libyan port of Marsa el-Hariga but deemed illegal by NOC, which called for international forces to seize the cargo. The tanker was subsequently forced to return to Zawiya to discharge its cargo.
Sanalla is also reported to have said this month that Libya’s crude oil production was now around 200,000 barrels per day of which about half is sent to the local refineries. NOC was also said to be holding talks with local groups and national oil companies to restart other closed oilfields, such as El Sharara and El Feel, which combined could add another 450,000 barrels per day.
The creation of the Libyan National Accord Government was expected to stabilise the country’s security situation, as well as rejuvenate its ailing economy which is very reliant on oil revenues.
However, the new government has still to receive a vote of confidence from all the Libyan factions, including the Eastern Government. So clearly, despite all the attempts to unify the different factions, the nation appears to be as divided as ever and we are unlikely see any substantial increase in crude exports anytime soon, Gibson concluded.