Clashes at Libya oil ports cut output by nearly half

The Zawiya oil installation in Zawiya, Libya. “Production has seen a reduction by 450,000 barrels per day, plus 70mn cubic feet of natural gas, equivalent to $33mn in sales based on market prices,” the head of Libya’s National Oil Company Mustafa Sanalla said yesterday.

Clashes between rival groups in Libya’s key oil export ports have caused output to drop by nearly half, the head of the National Oil Company said yesterday. “Production has seen a reduction by 450,000 barrels per day, plus 70mn cubic feet of natural gas, equivalent to $33mn in sales based on market prices,” Mustafa Sanalla told AFP via e-mail. The Ras Lanuf and Al-Sidra terminals have been closed since last Thursday when armed groups attacked oil facilities held by forces loyal to military strongman’s Khalifa Haftar in eastern Libya. Haftar’s self-styled Libyan National Army has since launched an offensive to push the militias out of the area, with the violence causing “catastrophic damage”, according to the NOC.

Sanalla said the clashes “will ultimately result in the loss of hundreds of millions of dollars in construction costs, and billions in lost sales opportunities”. The NOC chief, who was in Vienna for an Opec meeting on Tuesday, was revising upwards an earlier NOC estimation that put production losses at 400,000 bpd. On Monday, the NOC said fires caused by the clashes destroyed two crude tanks — reducing storage capacity at the Ras Lanuf terminal by 400,000 barrels. “Maintenance teams are still dealing with the aftermath of the blaze and are trying to ascertain the extent of the damage to the terminal,” Sanalla said.

The armed groups that launched Thursday’s attacks are loyal to rebel leader Ibrahim Jadhran. Jadhran’s Petroleum Facilities Guard controlled the terminals for years following the 2011 ouster and killing of longtime dictator Muammar Gaddafi — but they were eventually forced out by the LNA in September 2016. Aside from oil infrastructure damaged by conflict, Sanalla said Libyan authorities were also struggling to “conquer the shocking scale” of fuel theft. “The smugglers think they can operate with impunity — to the extent that the country is losing more than $750mn a year through domestic fuel smuggling alone,” he said.

Libya’s economy relies heavily on oil, with production at 1.6mn barrels per day under Gaddafi . His Nato-backed 2011 ouster saw production fall to about 20% of that level, before recovering to more than one million barrels per day by the end of 2017. “Those that seek to disrupt NOC operations and sequester facilities for their own gain should be seen for what they are — criminals,” Sanalla said. “Libyan natural resources and oil and gas revenues must be a catalyst for reconstruction and national prosperity, not conflict.”

Sources and photo-credits: AFP, Gulf Times