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Protests, deal collapseshamper Libyan efforts to resume oil exports

File - A worker from the Libyan Oil and Gas national company checks oil loading taps and meters at the Hariqa oil port storage on August 20, 2013 in Tobruk, Libya. (AFP PHOTO/MAHMUD TURKIA)

TRIPOLI/LONDON: Libya struggled to resume oil exports, reduced almost to a trickle by protesters, as an attempt at a deal with the government collapsed in its east and uncertainty prevailed over a solution in the west.

The government has been locked in talks with feuding tribes, militia and protester groups over the past two months as output collapsed to a tenth of Libya’s maximum capacity of 1.5 million barrels per day.

The worst disruption since the 2011 revolution has already cost Libya billions of dollars in lost revenues and has contributed to a spike in global prices to a six-month high during August.

Libyan media reported over the weekend that protesters in the east, which produces around two thirds of its output, have reached a deal to reopen export terminals from Monday while demanding a number of conditions to be met within three months.

But the spokesman for the protesters denied the reports.

“There is no deal and the port terminals in the east from Es Sider, Ras Lanuf to Brega and Hariga are closed for exports until the protesters demands are met. The government has not responded to our demands,” Osama al-Oreibi told Reuters.

Oreibi is the spokesman for the federalists in the “Brega political office,” headed by Ibrahim al-Jathran, who is seeking a bigger role in the oil industry.

Dialogue with protesters in Libya’s west, which produces around a third of its output, looked slightly more positive, although government officials said they remained cautious about the prospects of an immediate field reopening.

“I can say there are positive indicators, although we have to be cautious as the situation on the ground is fluid and keeps changing,” Deputy Oil Minister Omar Shakmak said, adding that he did not participate in talks.

After weekend negotiations, the government told state National Oil Corp. that it could expect a major blocked pipeline to resume operations Monday, a senior Libyan oil official said Monday.

The pipeline links the El-Feel and El-Sharara fields in the south to the ports of Mellitah and Zawiya.

The official asked not to be named as he said he still had concerns the deal could de delayed.

“Our people are ready to restart production but we are still waiting for the valves to be reopened. We are waiting for confirmation,” he said.

Industry executives say stoppages in the west are led mainly by the powerful Zintan tribe, a major rebel group that has become influential within government-financed army units and could be flexing its muscles for a bigger political role.

In the coastal east, demands beyond more pay extend to a broader political agenda including the sharing of oil revenues and a bigger self-government role.

Samir Salem Kamal, Libya’s representative at the Organization of the Petroleum Exporting Countries, told Reuters that daily production had averaged 200,000 bpd in September, compared to 650,000 bpd in August.

He added it would take weeks for production to climb back to precrisis levels even if strikes ended immediately, while repair and maintenance work would cost millions of dollars.

“If they open production, we will have to gradually return back. We are going to face problems for sure. I cannot imagine in a week or two, hopefully it will be weeks,” he said.

Some pipelines and pumping stations will need replacing because of prolonged stoppages. Adding to the problems could be the reluctance of European refiners, who buy the bulk of Libyan oil, to commit to purchasing large volumes next year, he said.

“I expect in 2014 we will face problems in selling our crude as they would consider Libya an unstable country that cannot meet its contractual commitments,” Kamal said.

 
A version of this article appeared in the print edition of The Daily Star on September 17, 2013, on page 5.

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