Libya’s National Oil Corporation (NOC) lifted force majeure on all oil exports on Friday as a Vitol tanker loaded at Es Sider after a half-year blockade by eastern forces, but said technical problems caused by the shutdown would keep output low.
“The increase in production will take a long time due to the significant damage to reservoirs and infrastructure caused by the illegal blockade imposed on January 17,” NOC said in a statement.
The Vitol-chartered Kriti Bastion is currently loading a 650,000 barrel cargo at the Es Sider port.
The blockade, which was imposed by forces in eastern Libya loyal to Khalifa Haftar’s Libyan National Army (LNA), has cost the country $6.5 billion in lost export revenue, NOC said.
“Our infrastructure has suffered lasting damage, and our focus now must be on maintenance and securing a budget for the work to be done,” NOC chairman Mustafa Sanalla said in the statement.
Control over Libya’s oil infrastructure, the richest prize for competing forces in the country, and access to revenues, has become an ever-more significant factor in the civil war.
The Government of National Accord, supported by Turkey, has recently pushed back the LNA, backed by the United Arab Emirates, Russia and Egypt, from the environs of Tripoli and pushed towards Sirte, near the main oil terminals.
Rising Libyan oil output could complicate matters for the Organization of the Petroleum Exporting Countries and its allies led by Russia, a group known as OPEC+, which has been curbing supplies to support prices.
“Libya has again become a major source of supply-side uncertainty for the market,” Energy Aspects said.
OPEC+ is expected to taper its supply cuts by some 2 million barrels per day (bpd) in August to 7.7 million bpd, and will hold a high-level virtual meeting on July 15, where Libya is bound to come up.
The International Energy Agency in a report on Friday highlighted rising Libyan output and higher U.S. production as supply risks to the market.
Energy Aspects expects Libyan output to ramp up to 950,000 bpd in December, and average 500,000 bpd in the second half of the year.
“If Libya fails to restart, then global crude stocks could draw by 4.5 million bpd over H2 20, rather than the 4.1 million bpd,” the consultancy said.