NOC cuts short-term deal with Wintershall as contractual dispute talks continue

By Libya Herald reporters.

Wintershall logo

Tripoli, 13 June 2017:

German oil firm Wintershall has reached a partial agreement with the National Oil Corporation (NOC) which will bring 160,000 bpd of production back on stream. However there is yet to be a full settlement of the dispute over contractual changes to favourable lifting contracts to which NOC insists Wintershall agreed and then reneged.

Since this March, NOC has excluded the German company from loading plans at the Zuetina terminal. This has meant the shutdown of Wintershall’s NC 96 and NC 97 fields as well as the linked Abouatiffel, 103A and Nafoora fields. NOC chief Mustafa Sanalla has put the lost revenue at $1 billion a month.

It seems possible that this temporary settlement was nursed by the German government. A month ago the German ambassador Christian Buck met Sanalla who urged him to help resolve the dispute. The deal announced today allows Wintershall to take only sufficient production to cover its costs with the rest going to NOC .

Alone among all the foreign oil companies operating in Libya, Wintershall had avoided moving from its historic 1956 concession agreement to a less generous Exploration and Production Sharing Agreement (ESPA).  NOC maintains that in 2010 the Germans agreed to change to the standard ESPA in return for extending its 60 year concession which was going to run out last year. NOC says Wintershall has since pulled back from the new arrangement.

The dispute has yet to be settled and today Sanalla said that the state company had reserved all its legal rights and would ensure that Libya’s interests were upheld.

However he is clearly relieved that a large lump of Libyan production has been restored.

“This shutdown was enormously costly to Libya ” he said, “I hope we can now get on with the business of meeting our oil production targets without interruptions”. He added that total oil production was now 830,000 bpd and NOC was targeting a million barrels by the end of next month.

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