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Libya declares force majeure on Sharara crude loaded at Zawiya: NOC

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Libya declares force majeure on Sharara crude loaded at Zawiya: NOC

Dubai — Libya's state-owned National Oil Corporation said Saturday it declared force majeure on Sharara crude loaded at Zawiya port due to an unlawful closure of a valve.

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NOC said 290,000 b/d of production at the Sharara oil field has been forced offline as the valve was closed by an unidentified group near Hamada and Zawiya.

"Any local market fuel deficit as a result of the refinery feed stock shortfall will be offset by international fuel imports," it said in a statement. "Production at the El Feel oil field near Sharara is unaffected."

General Electric Co. of Libya was informed that crude oil supply to the Obari power station will cease following the production interruption, it said, noting that supply from Sharara to Obari requires the transfer of a continuous amount of crude to production plant A's storage tank, which is currently full.

"Criminal activity has required NOC to declare force majeure at Zawiya," NOC chairman Mustafa Sanalla said in the statement. "Deliberate attempts to sabotage pipelines and production hurt both national oil revenues and critical power supply for everyday Libyans."

Libya is currently embroiled in a protracted civil war as the self-styled Libyan National Army, forces loyal to the UN-backed government and other militia groups have clashed regularly in the past three months.

In early July, Sanalla had warned that 700,000 b/d of Libya's crude output is at risk if the international community does not intervene in the current conflict.

The LNA has taken control of most of Libya's oil-producing areas but has stalled in its attempt to seize the capital, Tripoli, from the government, with fighting escalating in recent weeks.

The Sharara field was shuttered for almost three months from early-December to late-February when armed groups, with the help of local people, occupied its site in protest at economic conditions and frequent power outages in the south of the country.

In the past few weeks, there has been some growing concerns of deteriorating economic conditions amongst some locals in the southwest part of the country where Sharara field is located.

Libya's oil industry has been at the mercy of groups vying for control of valuable assets, with armed attacks on key pipelines and production facilities, since the 2011 civil war.

Crude output recovered recently to an over five-year high of 1.1 million b/d, even though security and political challenges continued to impede the sector.

Libya pumped 1.08 million b/d in June, a fall of 40,000 b/d from the previous month, according to the most recent Platts OPEC Survey. Technical issues as well as maintenance at some oil infrastructure pushed output lower.

--Eklavya Gupte, eklavya.gupte@spglobal.com

--Edited by Claudia Carpenter, claudia.carpenter@spglobal.com