Libya Oil Ports' Re-Opening Delayed Due to Row Over Payments

(Bloomberg) - Two of Libya’s biggest oil ports may not re-open soon as the hardening positions of rival factions pose a fresh challenge to international efforts to reunite the country and restore its crude exports.

Shipments from Es Sider, Libya’s largest oil port, and Ras Lanuf, the third-biggest, have been halted since 2014 amid the see-sawing conflict in the North African state. Exports were set to resume within three days after the Tripoli-based Presidential Council agreed to pay salaries of Petroleum Facilities Guard members at the ports, the PFG commander, Ibrahim al-Jedran, said on Thursday. On Monday, al-Jedran said the agreement has yet to be signed by the Presidential Council.

An agreement by the United Nations-backed unity government to pay security guards at the ports would set a “terrible precedent” and invite extortion by militias, National Oil Corp. Chairman Mustafa Sanalla said in a letter to UN Special Representative Martin Kobler, who met with al-Jedran on Thursday at Ras Lanuf.

“Right now we’re at a stalemate,” Riccardo Fabiani, North Africa analyst with the Eurasia Group, said by phone from London. “The sticking point throughout these negotiations has been how much money al-Jedran gets for re-opening the ports. It will take some more weeks, but I think the re-opening will happen. It’s just a matter of the two sides reaching an agreement on the money.”

Ports Attacked

Libya produced about 1.6 million barrels a day of oil before the 2011 uprising that ousted longtime leader Moammar Al Qaddafi. Output has withered since then to 320,000 barrels a day, data compiled by Bloomberg show, as the country fragmented and militias vied to control energy facilities. Es Sider and Ras Lanuf, along with the port of Zueitina, have been under force majeure, a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. Force majeure was declared after the ports came under attack.

The Petroleum Facilities Guard in Libya’s central region is “at utmost readiness” to re-open both oil ports and is still waiting for a representative of the Presidential Council to visit Ras Lanuf to sign an accord releasing funds to PFG soldiers, al-Jedran said on Monday in a telephone interview. 

Lump Sum

Al-Jedran wants payments for unpaid salaries of his Petroleum Facilities Guard members, plus a one-time lump sum for re-opening the ports, Eurasia Group’s Fabiani said. Sanalla, in his letter to the UN denouncing the agreement with the PFG, may be trying to put pressure on al-Jedran to lower his demands for money from the unity government, Fabiani said.

An agreement “sets a terrible precedent and will encourage anybody who can muster a militia to shut down a pipeline, an oil field, or a port, to see what they can extort,” the NOC’s Sanalla said in the letter.

Libya, with Africa’s largest proven crude reserves, split into separately governed regions in 2014, leading to the establishment of competing NOC administrations. The Government of National Accord, based in Tripoli, is trying to extend its authority over the rest of the country. 

The NOC’s rival administrations agreed to unify under a single management, the company said on July 3, in a step that Sanalla said at the time would help stabilize the government. Libya’s oil facilities and ports have come under frequent attack since Al Qaddafi’s ouster five years ago, leading to the slump in its crude output and exports.

- With assistance from Salma El Wardany. To contact the reporters on this story: Saleh Sarrar in Dubai at ssarar@bloomberg.net; Bruce Stanley in Dubai at bstanley5@bloomberg.net; Hatem Mohareb in Dubai at hmohareb@bloomberg.net To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net Bruce Stanley

Copyright 2016 Bloomberg News.

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