Libya oil ports’ re-opening halted by harder stances on payments

RIPOLI (Bloomberg) -- Two of Libya’s biggest oil ports may not re-open soon as the hardening positions of rival factions pose a fresh challenge to international efforts to reunite the country and restore its crude exports.

 

Shipments from Es Sider, Libya’s largest oil port, and Ras Lanuf, the third-biggest, have been halted since 2014 amid the see-sawing conflict in the North African state. Exports were set to resume within three days after the Tripoli-based Presidential Council agreed to pay salaries of Petroleum Facilities Guard members at the ports, the PFG commander, Ibrahim al-Jedran, said on Thursday.

 

The agreement by the United Nations-backed unity government to pay security guards at the ports, if it has been reached, sets a “terrible precedent” and invites extortion by militias, National Oil Corp. Chairman Ibrahim Sanalla said in a letter to UN Special Representative Martin Kobler, who met with al-Jedran on Thursday at Ras Lanuf.

 

“Right now we’re at a stalemate,” Riccardo Fabiani, North Africa analyst with the Eurasia Group, said by phone from London. “The sticking point throughout these negotiations has been how much money al-Jedran gets for re-opening the ports. It will take some more weeks, but I think the re-opening will happen. It’s just a matter of the two sides reaching an agreement on the money.”

 

Ports Attacks

 

Libya produced about 1.6 MMbopd before the 2011 uprising that ousted longtime leader Moammar Al Qaddafi. Output has withered since then to 320,000 bopd, data compiled by Bloomberg show, as the country fragmented and militias vied to control energy facilities. Es Sider and Ras Lanuf, along with the port of Zueitina, have been under force majeure, a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. Force majeure was declared after the ports came under attack.

 

Al-Jedran wants payments for unpaid salaries of his Petroleum Facilities Guard members, plus a one-off lump sum for re-opening the ports, Fabiani said. Sanalla, in his letter to the UN denouncing the agreement with the PFG, may be trying to put pressure on al-Jedran to lower his demands for money from the unity government, Fabiani said.

 

Largest Reserves

 

The agreement “sets a terrible precedent and will encourage anybody who can muster a militia to shut down a pipeline, an oil field, or a port, to see what they can extort,” the NOC’s Sanalla said in the letter.

 

Libya, with Africa’s largest proven crude reserves, split into separately governed regions in 2014, leading to the establishment of competing NOC administrations. The Government of National Accord, based in Tripoli, is trying to extend its authority over the rest of the country. The NOC’s rival administrations agreed to unify under a single management, the company said on July 3, in a step that Sanalla said at the time would help stabilize the government. Libya’s oil facilities and ports have come under frequent attack since Al Qaddafi’s ouster five years ago, leading to the slump in its crude output and exports.