NOC confirms oil closures resulting in loss 1.2 million b/d and daily financial losses of US$ 77 million
By Sami Zaptia.
London, 21 January 2020:
Libya’s state National Oil Corporation (NOC) confirmed yesterday a virtual total oil production shutdown resulting in a loss of crude oil production of 1.2 million b/d and daily financial losses of approximately $77 million.
The closures came in the lead up to the Berlin conference on Libya held last Sunday and are attributed by the NOC to the pro Khalifa Hafter forces guarding the oilfields and ports.
Reporting in a public information notice on its latest production and loading status at its blockaded oil ports, the NOC confirmed that Hariga, Brega, Sidra and Ras Lanuf ports are closed and under force majeure.
This, it confirmed, was declared after instructions to halt exports were given on 17 January 2020 to NOC operating subsidiaries by Major General Nagi al-Moghrabi, the commander of Petroleum Facilities Guards (PFG) appointed by the Khalifa Hafter-led Libyan National Army (LNA), and Colonel Ali al-Jilani from the LNA’s Greater Sirte Operations Room.
It explained that these ports have limited storage capacity, and that the NOC will be forced to shut crude oil production when capacity is filled.
As a result of the declaration of force majeure on all loadings from Zueitina, Hariga, Brega, Es Sider and Ras Lanuf ports, following these instructions to halt exports, the NOC revealed that it is unable to load a scheduled cargo of liquid petroleum gas (LPG) destined for Benghazi.
It explained that Benghazi storage facility contains 12 days of LPG supply, and the that NOC is taking measures to ensure continuity of supply.
Benghazi port remains open, however, with the NORDIC PIA tanker, carrying diesel, being discharged there. The ATLANTIC SIRIUS tanker, arriving from the Zawia refinery, also arrived at the Benghazi port yesterday, the NOC added.
The NOC warned that the shutdown of associated gas production, used to supply power plants in Zueitina and North Benghazi, will result in power shortages that will lead to load shedding in the eastern region.
Similarly, the closure of valves in the Hamada pumping station on 19 January 2020 by the PFG resulted in the declaration of force majeure and shutdown of production from the Sharara and El Feel oilfields. This caused the suspension of supplies to the Ubari power plant (in southern Libya) and will eventually cause it to stop when it runs out of stock, the NOC explained.
Production from the Hamada oilfield was shut down on 20 January 2020.
The NOC explained to the Libyan public that force majeure is a contractual clause that frees it from its legal obligations to supply oil or gas to customers when faced with circumstances outside its control, including war, strikes and bad weather. Force majeure is generally lifted when the circumstances that led to it being imposed are removed. Force majeure cannot be selectively applied to customers, concluded the NOC public information notice.