Libya prepared to open some oil ports closed by labor unrest, as the government vied with guards for control of export facilities. The country’s navy said it would seize any tankers attempting illicit shipments.
The ports of Zueitina and Hariga are ready to resume exports, Ibrahim Al Awami, an oil ministry official, said today from Hariga. Another port, Brega, was operational as of today, a union representative said. Among other terminals, the country’s largest, Es Sider, remains closed. Earlier, the navy said it will forcibly escort back to port any vessel carrying the nation’s crude without authorization, according to a statement carried by the Libyan News Agency.
Brent crude has risen 3.5% this month amid the turmoil in Libya, the holder of Africa’s biggest reserves, and disruptions in Iraq and Nigeria. Libya’s production has fallen to less than half the level pumped before the 2011 uprising against Muammar Qaddafi as protests by the Petroleum Facilities Guard, or PFG, for better working conditions has hurt exports.
“A more severe or longer Libyan disruption would be more bullish,” said Mike Wittner, head of oil research for the Americas at Societe Generale SA in New York. “Our base case assumption is that the current strike and current level of disruptions will be over by October.”
A tanker is waiting to load at Hariga, Al Awami, director of the Oil Ministry’s inspection and measurement department, said. The Greek-flagged Hellas Warrior, an Aframax crude oil tanker owned by Polembros Shipping Ltd., is outside the port, vessel-tracking data compiled by Bloomberg show. Storage tanks at the port are full, according to an oil ministry official who asked not to be identified, citing policy.
National Oil Corp. may lift its force majeure on exports of crude and refined products from Es Sider, Ras Lanuf, Zueitina and Brega by the end of the week with the resolution of the strikes, said Al Awami. Local residents expelled members of the Petroleum Facilities Guard who had been holding a sit-in at Zueitina, he said. Es Sider, the largest of Libya’s oil terminals with a capacity of 350,000 barrels a day, has been shut since July 28.
Naval vessels patrolling waters around Es Sider, Ras Lanuf and Brega will search all ships anchored in Libyan waters and return tankers without clearance to port, according to the navy’s statement on LANA.
The navy will end the “illegal presence” of unauthorized vessels and “prevent them from shipping Libyan crude unless there are legal contracting procedures with the National Oil Corp.,” LANA quoted the navy as saying. Prime Minister Ali Zaidan has warned that ships docking illegally at Libyan ports may be removed or bombed.
The force majeure, a legal clause that excuses the seller from making deliveries because of events beyond its control, was applied on Aug. 18, according to a National Oil Corp. document signed by Chairman Nuri Berruien and obtained by Bloomberg News.
Libya produced 800,000 barrels of crude a day last month, down from 1.6 million a day one year earlier, according to a monthly Bloomberg survey. The labor dispute is crippling the government’s main source of revenue, costing at least $1.6 billion, Oil Minister Abdulbari Al-Arusi told reporters in Tripoli on Aug. 15.
While Es Sider and Ras Lanuf remained closed today, another port, Zawiya, has remained open amid closures elsewhere, and the terminals of Brega and Hariga “entered duty today,” Jamal Ben Zuglam, a coordinator of the oil and gas workers union, said today by phone from Tripoli.
Refiners around the Mediterranean Sea are seeking crude from Nigeria to replace Libyan crude because it’s similar in quality, pushing up freight costs between the two locations, JBC Energy GmbH, a consultant based in Vienna, said in a report.