A Libyan oil company said production has nearly been erased because of blockades at the country's oil loading depots. File Photo by cherezoff/Shutterstock
July 2 (UPI) -- A Libyan company said oil production was cut Monday by 850,000 barrels per day because operations at two oil terminals were suspended over control disputes.
The Libyan National Oil Corp. suspended its contractual obligations for loading oil at the Hariga and Zuetina oil ports on Monday. Called force majeure, the suspension followed port blockades imposed by the Libyan National Army in violation of U.N. Security Council resolutions giving the NOC control.
"Despite our warning of the consequences and attempts to reason with the LNA General Command, two legitimate allocations were blocked from loading at Hariga and Zuetina this weekend," NOC Chairman Mustafa Sanalla said in a statement. "The storage tanks are full and production will now go offline."
The NOC declared force majeure at the Ras Lanuf and Es Sider terminals in June. Storage tanks at the Ras Lanuf oil port suffered catastrophic damage after militants stormed the facility. Reconstruction efforts could take several years, especially considering the tense security situation in the country.
The company said the loss to daily production was about 850,000 barrels of oil. Secondary sources reporting to economists at the Organization of Petroleum Exporting Countries said Libya produced an average of 955,000 barrels of oil per day in May, one month before the latest outbreak of violence in Libya's oil belt.
A joint statement from the British, French, Italian and U.S. governments last week relayed deep concern about the security situation at Libyan oil fields. Those four countries are members of the International Energy Agency, which called for the release of oil from strategic stockpiles to respond to the insecurity that ground Libyan oil production to a halt in the wake of civil war in 2011.
Libya is an OPEC member on the sidelines of a collective agreement to curb production to stabilize a market recovering from the collapse in oil prices in early 2016. OPEC countries, alongside major producers like Russia, vowed to add more oil to the market in the second half of the year to address pending and real supply deficits.
Apart from Libya, Venezuela, a founding OPEC member, has experienced chronic production issues. Iranian exports of around 2 million barrels per day are under threat from U.S. sanctions that go into force in November.
In response to a phone call from U.S. President Donald Trump during the weekend, Saudi Arabia said it could tap into some of its 2 million barrel per day spare production capacity if necessary to offset market strains.