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Libya's NOC declares force majeure at key Sharara oil field: source

Dubai (Platts)--20 Aug 2017 1159 pm EDT/359 GMT


Libya's National Oil Corp. declared a force majeure Sunday on crude deliveries from its key Sharara oil field after a blockade on its pipeline by a militant group on Saturday, a source close to the company said on Sunday.

The field has been offline since Saturday when the Zintan Brigade closed the Rayaina pipeline yet again, the source said.

NOC has not commented on the status of the field, and could not be reached for a comment. Spain's Repsol, NOC's biggest partner at Sharara could not be reached for comment either.

It was not immediately clear why the militant group, regarded as one of the most powerful in western Libya, closed the pipeline.

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Crude oil production at the Sharara field in southwestern Libya has been volatile the last few weeks. NOC said on August 16 that production was back to normal after security problems disrupted operations.

NOC Chairman Mustafa Sanalla visited the field last Wednesday to review the situation, along with Abdul Majeed al-Shahe, chairman of the operator, Acacus Oil Operations, and Luis Naves, the general manager of Repsol. Workers had complained earlier of a lack of security and repeated armed robberies.

This was after output at the field had been restored to normal rates on August 8 following a brief interruption when armed protesters broke into the control room of the downstream Zawiyah refinery and closed down pipelines, shutting in around 200,000 b/d overnight.

Sharara is operated by a joint venture of NOC, Spain's Repsol, France's Total, Austria's OMV, and Norway's Statoil. Its production has fluctuated due to disruptions from frequent protests. It came back online only in June, after being closed since the end of May, when workers protested the death of a colleague at the field.

This was barely a month after NOC reached a deal to lift the blockade on a pipeline to the Zawiyah oil terminal and refinery, allowing production to restart.

An S&P Global Platts survey of oil industry officials, traders and analysts earlier this month estimated total crude production from Libya at an average of 990,000 b/d in July, up 180,000 b/d from June.


ZINTAN BRIGADE'S BLOCKADE


Despite coming from a small mountain town in the west, the Zintan Brigade has held considerable influence in the region, even occupying the capital Tripoli from 2011 to 2014.

The anti-Islamist group has allies with the powerful Libyan National Army led by General Khalifa Haftar, who supports a rival government based in the eastern city of Tobruk, known as the House of Representatives.

Since then some of its members, under the Petroleum Facilities Guards, have been responsible for shutting vital pipelines linking the Sharara and El-Feel oil fields in southwestern Libya to coastal terminals, costing NOC billions of dollars in lost revenue.

After two years of blockades, the 300,000 b/d Sharara field was reopened in late December last year. In April, the Zintan leadership struck what was meant to be a long-lasting deal with NOC and the PFG, allowing NOC finally to lift its force majeure.

"This is intended to be a lasting solution. We have agreed to the lifting of force majeure only on the condition that no extortion payments are made to the blockaders now or in the future. With the support of the PFG and Zintan Tribes Elders Council leadership, we as a nation can put an end to the blockade as a scourge of our society," NOC said at the time.

The deal was not published, but according to some sources in Libya it was dependent on three key conditions -- build hospitals and schools, greater representation for its leaders in the government, and allowing international flights from Zintan. However, none of those conditions have been met as yet.

--Adal Mirza, adal.mirza@spglobal.com
--Edited by E Shailaja Nair, shailaja.nair@spglobal.com




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