Libyan Crude Output at Risk as East and West Tussle for Control

BENGHAZI/LONDON, May 4 (Reuters) - Libya's crippled oil production appeared at risk of further decline on Wednesday after an escalating stand-off between rival eastern and western political factions prevented a cargo belonging to trading giant Glencore from loading.

A Tripoli oil official warned the country's oil output could fall by 120,000 barrels-per-day (bpd) if the Benghazi-based National Oil Corporation (NOC), set up by the eastern government, continues to block tankers loading for Tripoli from the eastern Marsa el-Hariga port.

The Seachance tanker left the port on Wednesday of its own accord and without loading any of its planned 600,000 barrel crude cargo for Glencore, a port official said.

Reuters ship tracking showed the tanker was still waiting outside the port. The Seachance was originally expected to load on April 26-28.

The stand-off at Hariga, part of a broader political struggle between factions in eastern and western Libya, threatens to further reduce oil output which has fallen to less than a quarter of its 2011 high of 1.6 million bpd.

Exports from the port are usually divided between allocations to Glencore, as part of an oil export deal the trader struck with the rival Tripoli NOC last year, and cargoes to the 120,000 bpd Zawia refinery in western Libya.

Glencore declined to comment.

Much of Libya's oil production is concentrated in the east. The NOC in Tripoli has ambitious plans to revive output but those have been put in jeopardy by continuing political conflict and repeated attacks on eastern oil facilities by Islamic State militants.

The NOC in Benghazi ordered port workers not to load the Seachance after seeing a tanker carrying its first attempted oil export shipment blacklisted by the United Nations, and returned to be unloaded in western Libya.

The Tripoli NOC and its western backers warn that efforts by the eastern NOC to sell oil independently risk dragging the country further into crisis. But eastern politicians, who have not formally endorsed a U.N.-backed unity government trying to establish itself from the capital, insist that the Benghazi company is the country's legitimate NOC.

On Wednesday the head of the Benghazi NOC, Nagi al-Maghrabi, said there was no plan by the company's board to close Hariga, and suggested the refusal to load the Seachance was made for bureaucratic reasons.

There is "no plan to shut down the port, the revenue is for all Libyans," Maghrabi told Reuters.

"We just ask to have the document for any shipment in advance ... otherwise it will not be allowed to load. We still respect all contracts."

While any losses in Libyan exports could have myriad implications for the country itself, oil traders said the past years of chaos were limiting the immediate impact on oil prices.