Econostrum | Economic News in the Mediterranean

Libyan oil port of Zouetina resumes operations

Written by Frédéric Dubessy on Thursday, May 5th 2022 à 10:25 | Read 384 times

The Libyan National Oil Company has temporarily lifted the force majeure situation in the oil terminal of Zouetina to free up storage capacity.

It became urgent to release storage capacity (photo: Zueitina Oil Company)
It became urgent to release storage capacity (photo: Zueitina Oil Company)
LIBYA. The Libyan National Oil Company (NOC) reports that the Zouetina oil terminal has temporarily resumed operations "in order to avoid imminent environmental disasters that may occur". Leaks have started to occur in overfilled tanks whose bottoms cannot support the weight. These installations are poorly maintained due to a lack of budget in recent years to maintain the equipment. In addition, due to a lack of storage capacity, some of the crude oil passing through the pipelines was at risk of being lost. The need to reduce stocks and thus free up storage capacity became urgent.

The Zueitina Oil Company, which manages this infrastructure, was instructed to start shipping crude to tankers already in the vicinity of the port. Two of them were loaded with crude oil on 1 May 2022.

The NOC was thus able to lift the force majeure situation - declared when it is unable to meet its contractual commitments - "in the hope that the crisis will soon be resolved", it says.

Loss of tens of millions of dollars per day

Like other, notably in the east of the country, the port was closed a fortnight ago following the intervention of demonstrators, including some supporters of the Libyan National Army (LNA) of General Khalifa Haftar, demanding a fairer distribution of oil revenues. These actions come at a time when Libya is in the midst of a political crisis with two rival prime ministers in office. They also aim to put pressure on Abdel Hamid Dbeibeh, appointed in March 2021 by the Libyan Political Dialogue Forum to ensure the interim and prepare national elections, to step down in favour of Fathi Bashagha appointed in February 2022 by the parliament based in Tobruk (east of the country) to succeed him. The latter supports these blockades and recently condemned: "the waste of public money and the exploitation of Libyan wealth for the benefit of an outlawed government."

According to the NOC, oil production has been reduced by 550,000 barrels per day as a result of these events. Mohammed Aoun, Libya's oil minister, said that his country was losing tens of millions of dollars a day due to the closure of oil facilities. This bill is even more serious given that oil prices are at their highest and that oil accounted for 97% of the state's revenue in 2011, i.e. the sum of 103.4 billion Libyan dinars (€19.90 billion).

Read also: Libya's political crisis spills over into oil production  

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