Page 5 - DMEA Week 43 2020

DMEA COMMENTARY DMEA

was speaking on the same day that NOC said it Ras Lanuf and Es Sider terminals, but it also
had lifted force majeure on the Ras Lanuf and stems from the resumption of production at
Es Sider terminals, bringing the number of fully additional sites. For example, NOC reported
operational export facilities on the Mediterra- in a statement on October 26 that it had been
nean coast up to five. (Brega, Marsa el-Hariga able to lift force majeure at El Feel, the last
and Zueitina were all cleared of foreign troops in major oilfield that had remained offline. It
the second half of September.) said the site was on track to bring yields back
up to 70,000 bpd within just a few days and
Economic fallout “[declared] the end of the blockades at all Lib-
All five of these terminals – along with the rest of yan fields and ports.”
Libya’s oil infrastructure, including production Meanwhile, progress is being made on other
systems, pipelines, refineries and storage depots fronts. In its statement on the re-opening of Ras
– had slowed or halted operations following an Lanuf and Es Sider, NOC said: “[As] production
LNA offensive in January. As a result, the coun- resumes at the Waha and Harouge fields, pro-
try’s crude production plummeted from about duction levels will reach 800,000 bpd within two
900,000 bpd to less than 100,000 bpd in just a weeks and will exceed 1mn bpd in four weeks.”
few months. If the company’s forecasts are accurate, Libya
The slump has wreaked havoc. Oil exports are is less than a month away from restoring output
Libya’s main source of revenue, and central bank to year-ago levels. It may even be able to sustain
officials noted in mid-September that the coun- this success if it can show that it has assuaged
try had racked up at least $9bn in lost revenues as LNA’s long-standing claims that authorities in
a result of the production stoppages. At the same Tripoli do not provide the eastern and southern
time, the blockade has increased the govern- parts of Libya with a fair share of the country’s
ment’s deficit spending by disrupting domestic oil income.
fuel shipments and making imports necessary. So far, it is not clear whether or to what extent
As such, LNA’s agreement to suspend the these concerns have been addressed. As of
blockade came as a great relief to NOC. The com- press time, the UN and the Libyan factions had
pany and its subsidiaries succeeded in bringing not yet divulged all the details of the ceasefire
crude production back up to 500,000 bpd as of agreement.
mid-October. Output levels then climbed even Williams did tell reporters in Geneva,
higher over the following week, reaching 560,000 though, that the parties had agreed to take steps
bpd on October 21, a source with knowledge of that would re-establish national control over
the matter told Bloomberg last week. key institutions, including NOC and the cen-
tral bank. The former is based in Tripoli but has
Full recovery in sight? worked to remain neutral in the conflict between
According to NOC, yields are on track to keep GNA and LNA; it has been depositing oil rev-
rising. enues in the latter for distribution among the
This is partly due to the re-opening of the regions. ™

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