Libya’s eastern oil ports will resume shipments within hours after the state energy producer regained control of the terminals following clashes in the region last month.
National Oil Corp. lifted force majeure at the ports of Ras Lanuf, Es Sider, Hariga and Zueitina after forces loyal to eastern military commander Khalifa Haftar handed the facilities over to the state producer early Wednesday, according to an emailed statement from the Tripoli-based NOC. Force majeure is a legal clause protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.
“Production and export operations will return to normal levels within the next few hours,” the NOC said. A separate statement from a security force guarding the ports confirmed that exports will resume there, according to a person familiar with the relevant order sent to all companies and terminals. Brent crude futures fell by as much as 2.7 percent.
The imminent re-opening of the four ports marks another abrupt turnaround in Libya’s fortunes as a global supplier of crude. Haftar, after clashing with a rival militia last month, had transferred control of the ports to an oil authority in the eastern city of Benghazi that isn’t recognized internationally. A political standoff with the NOC in Tripoli led to a halt in exports of some 850,000 barrels a day. Instability and supply halts in Libya are complicating OPEC’s drive to pump more crude and setting back United Nations-backed efforts to hold elections this year.
Brent crude tumbled by as much as $2.10 after the NOC’s announcement. The benchmark contract pared losses and was trading 2.1 percent lower at $77.18 a barrel in London at 11:34 a.m. local time.
Deterioration in the economy has stoked anger in eastern Libya over a perceived misuse of funds and a view that that too much wealth is concentrated in the west. Haftar’s forces say they never received any money or thanks from the Tripoli NOC for protecting oil facilities. The oil company’s chairman, Mustafa Sanalla, counters that crude revenue goes to the central bank and that he’s not responsible for how it gets distributed.
“We need a proper national debate on the fair distribution of oil revenues” Sanalla said in the statement. “It is at the heart of the recent crisis. The real solution is transparency, so I renew my call on the responsible authorities, the Ministry of Finance and Central Bank, to publish budgets and detailed public expenditure. I will work with other national stakeholders to enhance transparency and resolve this crisis—for the benefit of all our citizens.”
While Libya holds Africa’s largest oil reserves, years of conflict among armed groups competing for influence over its energy riches have hobbled production and exports since a 2011 revolt. Output has dropped to 527,000 barrels a day, Sanalla said on July 9. The country was pumping about 1.3 million barrels of crude a day in February before militias closed the ports, he said at the time.