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Tanker fixed to load crude from Libya's Es Sider port despite force majeure amid ceasefire

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Tanker fixed to load crude from Libya's Es Sider port despite force majeure amid ceasefire

Highlights

Hess charters vessel to take stored crude: shipping report

Key Libyan ports blockaded in power struggle

Militia said it may allow some loadings to relieve storage

London — Hess may seek to load a cargo of stored crude from Libya's Es Sider port this week, in what could be a major test for a recent ceasefire between warring factions who have brought the country's oil production to a near standstill, sources told S&P Global Platts.

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The company has chartered the Greek-flagged Minerva Eleonara to take on 600,000 barrels of crude from the terminal, according to a shipping report seen by Platts, and sources said it may arrive at the port as soon as Sept. 10, though its arrival has yet to be confirmed by port officials.

Libya's National Oil Company has maintained a force majeure on Es Sider and other key ports, with the rebel Libyan National Army imposing an oil blockade as it vies for control of the country against the UN-backed Government of National Accord.

But a ceasefire after UN-mediated talks in Geneva in August could pave the way for crude exports to resume.

The Petroleum Facilities Guard militia, aligned with the LNA, has said it may reopen key oil ports to allow exports of some barrels from storage tanks that have been filled to capacity, shutting in oil and gas production.

Hess, which could not immediately be reached for comment, could be the first company to lift oil from Es Sider in nine months, except for a brief window in July, when the Vitol-fixed Kristi Bastion was allowed to export a 600,000 barrel cargo, according to Platts shipping tracking program cFlow.

Hess holds an 8.16% interest in Libya's Waha concession, which has 13 producing fields in the Sirte Basin linked to Es Sider.

"They are unsure if it will go ahead," a source familiar with the matter said of Hess on condition of anonymity. "They are worried the PFG won't allow it. There is no deal on lifting the FM yet."

NOC, which has welcomed the ceasefire while also decrying the presence of armed groups around oil terminals, was not immediately available for comment.

On Aug. 24, NOC said OMV lifted a 30,000 mt condensate cargo from the Brega terminal to free up storage capacity in a sign of deescalating tensions, though sources said a crude export from the larger Es Sider would be a much bigger breakthrough.

Crude storage full

Crude production in Libya, which holds Africa's largest crude reserves, has been slashed from more than 1.1 million b/d before the blockade to around 70,000-110,000 b/d in the past few months due to the oil blockade.

What exports remain are loaded directly from Libya's offshore fields in the Mediterranean.

The Minerva Eleonara was positioned near Kaloi Limenes port in Crete, Greece, as of 1613 GMT, according to cFlow.

It was reported fixed for Es Sider at w60 on the cross-Mediterranean run, with options for UK Continent and US Gulf discharge. Market participants said Libyan loadings were priced at a premium from normal cross-Mediterranean loadings given geopolitical uncertainty and the risk of any single stakeholder failing the ship.

"We have been told that the ports are open, but before NOC can lift the FM they are doing maintenance at the fields and the ports and training new workers," a broker said.

"Companies with equity in Libya as in Hess, Vitol, Unipec, etc., will have the opportunity to ship the oil from the ports without any problems due to [the fact] that oil storages are full at the moment and they need to be shipped away in small and big parcels."

On Sept. 8, another Aframax tanker, the Drepanos, was reported on subjects with Total on a Farwah-to-Turkey run set to load Sept. 16.