The Libyan government has lifted a force majeure on upstream exploration activity as it strives to increase oil and gas production in the country.
French shipbroker BRS Group believes this is a sign of improving stability in the North African country.
The Tripoli-based Government of National Unity (GNU) said in a statement that it would provide the “necessary support and ensure safety” for international oil companies if they were to return.
Libya holds the largest oil and gas reserves in Africa, but production has been between 400,000 and 600,000 barrels per day (bpd) below pre-civil war levels.
Exports averaged 1.2m bpd in the week to 9 December.
“It is hoped that the involvement of more international oil companies in the country’s upstream could take production back towards its pre-civil war levels,” the broker said.
“If this was the case, and considering that Libya does not have any plans to rehabilitate its refineries which operate at a fraction of their capacity, it would lead to higher exports,” the Paris shop added.
This would likely boost regional aframax and suezmax demand, BRS believes.
“We understand that VLCCs remain unable to fully load at Es Sider due to insufficient draft,” BRS said.
There are as yet no concrete plans in place to dredge the terminal.
State-owned National Oil Corp (NOC) said it wants oil majors with exploration and production agreements to restart activities.
Russian oil company Tatneft recently re-started work in the Ghadames Basin, while NOC hopes BP, Eni, TotalEnergies, ConocoPhillips, OMV and Repsol will return, S&P Global Commodity Insights reported.
An oil blockade put in place by warlord Khalifa Haftar was ended in July.
Analysts at S&P Global expect production to hold at 1.1m bpd through to the end of the year, given Haftar’s agreement with former rival and interim prime minister Abdula Hamid Dbeibah.
“Although it may be a matter of time before General Khalifa Haftar loses patience and decides to shut exports to gain leverage (as in 2020 and mid-2022),” they said.
