Two western Libyan oil terminals under force majeure after pipeline shutdowns

(March 30) Two oil terminals in western Libya Zawiya and Mellitah are under force majeure after a pipeline shutdown prevents them from fulfilling their contracts.

The pipeline from Libya's biggest oil field Sharara has been shut down. A group of militia guarding the field shut down the pipeline due to a delay in the payment of their wages Libyan officials said. The pipeline had been just opened last December after having been closed for two years. Together with production from eastern fields Libya's production was said to reach 700,000 barrels a day but the shutdown of the pipeline and another one to the smaller Wafa field will lessen production by about 250,000 barrels a day. However officials expected that the dispute would be resolved shortly. Repso SA of Spain and ENI SpA of Italy who both have stakes in the two fields did not reply to requests for comment.

The increase in Libya's exports ceased briefly for the short while that two ports, Es Sider and Ras Lanuf were captured from the forces of eastern commander Khalifa Haftar. However, he has recaptured them and already one tanker has been loading oil at Es Sider.

The tanker Sea Vine was to arrive at Zawiya on Wednesday to load 600,000 barrels of crude but the booking has been canceled according to a source who did not want to be identified. However, Bloomberg tanker tracking still shows that the Sea Vine is headed for Zawiyah. Libya's output per day is now around 500,000 the lowest since last September. There has been no official comment by the NOC according to Reuters. Before the uprising against Gaddafi in 2011 output was about 1.6 million barrels per day. The NOC had been hoping to quickly increase production.

The NOC has criticized attempts to sell oil illegally and not through the NOC as is required by law. The Presidency Council of the UN-brokered Government of National Accord recently decided to take upon itself the power of the oil ministry and also deprive the NOC of some of its powers. This did not sit well with the NOC: "The National Oil Corporation (NOC) has come out fighting in a battle with the Presidency Council which yesterday stripped the oil ministry of key powers and assumed many of them itself, while also diminishing NOC’s role." Mustafa Sanalla, chair of the NOC said: “I have asked the Presidency Council to withdraw its recent resolution. It has exceeded its authority. Only the House of Representatives, the legislature, has the power to make these changes”. So as well as a work stoppage threatening NOC production and export, there is also an internal split that could create even more problems.