Libya oil output falls as fresh clashes force ports to shut

CAIRO (Bloomberg) -- Libya’s crude output dropped after clashes forced two of the country’s biggest oil ports to shut down, threatening the OPEC member’s efforts to revive the production of its most important commodity. The North African country’s production fell to 650,000 bpd from about 700,000 bpd a few days ago, according to a person with knowledge of the matter

Crude shipments from Es Sider, the nation’s largest oil port, and Ras Lanuf, its third-biggest, have been suspended until security improves and workers return to the facilities, Jadalla Alaokali, a board member of Libya’s National Oil Corp., said by phone. Production from fields feeding the ports has declined and may be cut further if the two terminals remain shut and the situation doesn’t improve soon, he said.

The Benghazi Defense Brigades, a militia not allied to the United Nations-backed government in Tripoli, seized the Es Sider terminal on Friday, according to people with knowledge of the situation, who also asked not to be identified because they aren’t authorized to speak to the media. The facility had previously been under the control of eastern-based military commander Khalifa Haftar.

Haftar’s force, which calls itself the Libyan National Army, is preparing ground and air units to repel rival factions in the central coastal region around Es Sider, an LNA spokesman, Ahmed al-Mesmari, said Monday in a video posted on his Facebook page. He urged citizens to stay home.

The clashes jeopardize the surge in Libya’s oil production after output and exports had resumed from Es Sider and other facilities previously blockaded by fighting between armed groups. Production in February was almost double the level of a year earlier, data compiled by Bloomberg show. Libya holds Africa’s largest crude reserves.

Workers Evacuated

The country may reschedule crude loadings at Es Sider and Ras Lanuf and transfer them to other ports like Zueitina and Brega, another person with knowledge of the situation said. Es Sider was scheduled this month to ship four cargoes of 630,000 bbl each, according to a copy of a tanker-loading program obtained by Bloomberg.

The NOC held an emergency meeting on Friday with other companies that operate Libya’s oil fields, and reviewed plans for exports and the safety of workers and storage tanks, according to a statement on the NOC website. They also reviewed export-loading schedules, it said, without providing more details.

The NOC sees no need for now to declare force majeure at Es Sider or Ras Lanuf, said Alaokali, the company’s board member. Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

“We are against any actions that could damage the oil infrastructure in the country including oil fields, pipelines, ports, plants and other petroleum facilities,” NOC Chairman Mustafa Sanalla said in a statement posted Saturday on the company’s website.

Libya has been boosting its production, resuming shipments from key ports after months of conflict. The more it pumps, the greater the pressure on other OPEC members to curb supply to eliminate a global oil glut. Libya produced 1.6 MMbpd before a 2011 revolt sparked fighting that prompted foreign investors to withdraw.