Libyans Remain Divided on When to Restart Biggest Oil Field

(Bloomberg) -- A meeting between Libya’s top oil executive and prime minister in Abu Dhabi ended without a clear agreement on when to restart the country’s biggest oil field.

Tripoli-based Prime Minister Fayez al-Serraj’s office said in a statement that an agreement was reached that could end the halt. Mustafa Sanalla, chairman of Libya’s National Oil Corp., reiterated his position that “force majeure” can’t be lifted until all militants leave the deposit.

The impasse over Sharara, which can pump about 300,000 barrels of crude a day, is entering its third month. NOC insists that it won’t resume production while armed groups are there. The self-styled Libyan National Army, loyal to eastern leader Khalifa Haftar, controls the field and has said it’s ready to restart. The U.A.E. backs Haftar, who is struggling with the internationally recognized government in Tripoli for control in Libya.

Libya’s feuding administrations met before in the U.A.E., in 2017, reaching a cease-fire deal after two days of talks in Abu Dhabi.

Expelling Militants

Haftar’s LNA, the country’s most powerful militia, said its recent operations in the southern part of the country, including the capture of the Sharara and nearby El-Feel fields, is intended to expel militants and secure energy facilities. The dispute delaying the restart of Sharara is about which force should secure the field.

Although Haftar took control of the deposit and said it was secure and ready to resume pumping oil, he handed it over to the same force that had closed the field in December. Sanalla refused to resume output and said the NOC’s safety concerns have yet to be addressed. Security forces currently protecting the field are the same guards who have “committed violent and terrorizing acts against workers,” he said Sunday.

Libyan officials meeting in Abu Dhabi on Tuesday agreed to coordinate the evacuation of some groups from the field and hand over control of the area to the National Oil Corp., according to the prime minister’s statement. The NOC’s Sanalla said the company wants assurances from Haftar that arrest warrants will be served and wanted individuals will be removed from the field.

Force Majeure

The field remains under force majeure, a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

Sharara is a joint venture between Libya’s NOC, Repsol SA, Total SA, OMV AG and Equinor ASA. It shut in December when state guards and armed residents seized it for financial demands, the latest in several such closures over the past few years.

Libya, one of the most politically fragmented members of OPEC, has endured major oil disruptions, and multiple battles and blockades have hindered efforts to revive output. The country pumped about 1.1 million barrels a day last year, the highest since 2012, but still only about two-thirds of its production before the 2011 civil war.

©2019 Bloomberg L.P.