Libya's NOC lifts force majeure on Sharara, El Feel crude, exports to start imminently

London — Libya's National Oil Corporation lifted force majeure on crude loadings out of the Sharara and El Feel fields, with export operations from the Zawiya terminal poised to start "as soon as possible," it said June 8.

The state-owned oil company confirmed that both the 300,000 b/d Sharara and 75,000 b/d El Feel fields had reopened in the past few days, paving the way for a restart of almost a third of Libyan crude production.

"I also confirm that crude oil is now reaching Zawiya refinery, which will resume its operations to produce fuel for domestic use," NOC chairman Mustafa Sanalla said in a statement. "This will reduce pressure on the budget allocated to import fuel."

Sharara, Libya's largest oil field, restarted production on June 6, while El Feel resumed operation on June 7, NOC said.

The two sites were shut in for almost five months due to an oil blockade, which dragged Libyan oil output to its lowest level in almost nine-and-a-half years.

NOC said Sharara production was at 30,000 b/d due to damage resulting from the very long shutdown but added that it is expected to return to full capacity within 90 days.

El Feel will start at a capacity of 12,000 b/d and it will return to full capacity within 14 days, NOC said.

A key pipeline valve connecting the Sharara and El Feel fields with the Zawiya export terminal and refinery reopened on June 5, paving the way for a resumption of crude output.

Libyan crude production was around 70,000-80,000 b/d until a few days ago, less than a tenth of output before Jan. 18, when the Libyan National Army orchestrated an oil port blockade, and the lowest level since September 2011, when civil war tore the country apart and led to the downfall of Colonel Moammar Qadhafi.

Switching sides

Recent military victories by the UN-backed Government of National Accord against the self-styled Libyan National Army is causing many tribal groups and militias to switch allegiances back to the GNA.

NOC has managed to convince local groups that control the 300,000 b/d Sharara and 75,000 b/d El Feel fields to switch sides and reopen the key sites over the past few days.

Until recently, the Petroleum Facilities Guard, protecting the fields, had been supporting the LNA, led by Khalifa Haftar. But as the LNA has lost ground, the PFG is now under GNA command, sources said.

NOC also exported some crude and condensate from its storage at the Zawiya terminal last week, the first shipment since mid-January. NOC is now expected to lift force majeure on Sharara crude loadings out of Zawiya in the next few days.

The GNA is now moving eastwards, toward the eastern oil crescent, where the key oil terminals are located, and more fighting is expected.

Despite recent military gains by the official government, the LNA still controls key oil infrastructure, mainly the eastern oil export terminals of Es Sider, Ras Lanuf, Brega, Zueitina and Marsa el Hariga. This means some two-thirds or around 800,000 b/d of Libyan crude remains offline.

The restart occurred just as the OPEC+ alliance agreed to extend 9.6 million b/d of production cuts to July, brushing aside Mexico's defection from the pact and receiving pledges of improved compliance from Iraq, Nigeria, Angola and Kazakhstan.

Libya is currently exempt from the historic cuts, and any new production could complicate efforts by the 23-member coalition to rebalance the market.