Libya still exporting crude despite blockade

Libya is still exporting crude more than two weeks after the country's eastern-based administration imposed a blockade on oil fields and terminals.

Exports have fallen drastically from pre-blockade levels but the country has still exported five crude cargoes totalling about 3mn bl since the beginning of September and is preparing to load more in the coming days, according to a shipping source and tracking data.

Libya's eastern-based administration ordered the oil blockade on 26 August in response to an attempt by its rival administration in the west to replace the central bank governor. The blockade has pushed Libya's crude production from around 1mn b/d to as low as 300,000 b/d, Argus estimates.

The shutdown order was meant to halt operations at Libya's eastern oil terminals — Es Sider, Ras Lanuf, Zueitina, Marsa el Brega and Marsa el Hariga — but all of Libya's exports so far this month have loaded from one of these ports.

Libya typically exports 1mn b/d of crude. The average this month is about 300,000 b/d. That some oil continues to trickle through represents a change from past blockades, when eastern export terminals were completely shut and crude production fell close to zero.

The more flexible nature of the latest blockade appears designed to suit the interests of the real force behind it, general Khalifa Haftar's Libyan National Army (LNA), which controls the country's east and southwest. It is also the first nationwide blockade under the tenure of state-owned oil firm NOC's new chairman Farhat Ben Gudara, who is known to be close to Haftar.

Some output has been kept online in the east to feed domestic refineries and to allow associated gas production to supply power plants. Past blockades caused severe power cuts and cut domestic supplies of diesel and gasoline, putting pressure on Haftar to lift them.

Argus understands that some, if not all, of the cargoes that have left Libya this month are part of NOC's crude-for-products programme, which is key to a booming fuel smuggling industry centred in the east. A source told Argus that two cargoes due to be loaded from Marsa el Hariga this month are for eastern-based Libyan firm Arkenu Oil, which analysts suspect was set up to create a direct oil revenue stream independent of the central bank in Tripoli.

"What we're seeing is not really a conventional blockade," said Jalel Harchaoui, a Libya specialist at the UK's Royal United Services Institute.

UN-led talks to resolve the leadership crisis at the central bank which sparked the oil blockade have so far failed to result in an agreement. Libya's oil export revenues usually flow into the central bank, making it one of the country's most powerful institutions. The impasse has degraded Libya's ability to carry out international financial transactions and risks spiralling into a wider economic crisis.

By Aydin Calik