Reopened Libyan oil ports hope foreign staff will return to boost output

BREGA, Libya - Guards and officials at major ports in Libya's eastern Oil Crescent say they are hoping foreign workers will soon return as they struggle to build on output gains with meagre resources.

The National Oil Corporation (NOC) reopened three ports in the curve of coastline south of Benghazi in September, after the Libyan National Army (LNA) led by Khalifa Haftar seized them from a rival faction.

The lifting of a long blockade at the ports helped Libya's oil output to more than double to over 600,000 barrels per day (bpd). Last month, another blockade was ended at a pipeline in western Libya, pushing production to more than 700,000 bpd.

That is still well below than the 1.6 million bpd Libya was producing before a 2011 uprising and subsequent armed conflict severely disrupted output. Production in the Oil Crescent is still far under potential.

Recent and future gains threaten to complicate efforts by the Organization of the Petroleum Exporting Countries to cut output and bolster global prices, though Libya's recovery remains at risk from political chaos and security threats.

Since the ports changed hands, Haftar's rivals have tried to counter attack from the desert to the southwest, which could become a new flashpoint in the country's low-intensity conflict.

But Miftah Magariaf, head of the Petroleum Facilities Guard (PFG) deployed in the ports, said the oil and gas network in the whole of the eastern region, from Libya's eastern and southern borders with Egypt, Sudan and Chad, to the central region of Sirte, was now secured.

"This region is under the (LNA) general command, and wherever there are oil facilities or oil or gas pipelines, they are under the PFG. Now the situation is good and the area is protected," Magariaf told Reuters in Brega, one of four Oil Crescent ports that the LNA seized in September.

Foreign workers could return, he said. "We invite them to come back."

The NOC did not respond to a request for comment on how much output could be further boosted through the Oil Crescent ports, but based on pre-conflict capacity, the terminals should eventually be able to export at least an additional 300,000 bpd.

Officials have cautioned that any recovery will be gradual because infrastructure has been damaged by fighting and degraded by disuse. The NOC, which hopes to raise national production to 900,000 bpd by March, has also struggled to secure funds for its operating budget and for repairs from a U.N.-backed government in Tripoli that lacks full control over public finances.

Extensive damage

Security remains a major concern. Several foreign oil workers were kidnapped by Islamic State when it raided oilfields from its now defeated base in Sirte last year. In Tripoli, few nations have reopened embassies since pulling out during fighting between rival military factions in the capital in 2014.

Es Sider and Ras Lanuf ports, the largest in the eastern region, were closed for more than two years before the LNA took them over. They were severely damaged by fighting and attacks by Islamic State militants who have since been chased from their former stronghold in Sirte, about 180 km west of Es Sider.

During a recent visit by journalists to the ports, oil facilities at Ras Lanuf were largely deserted. The Ras Lanuf refinery, Libya's biggest with a capacity of about 220,000 bpd, is still shut.

"The closure of the oil ports had a very big impact on the plants," said Hamid al-Habouni, head of administration at the site. "We lack the budget to keep the plants working and maintain them."

Ras Lanuf Oil and Gas Company has only retained about 2 percent of nearly 6,000 foreign employees, said public relations manager Salem al-Iskandriya.

In Es Sider, just four out of 19 storage tanks are operational. Work is under way to bring three tanks back into use, but officials say repairs are hampered by lack of funds.

"We have some foreign workers including from the Philippines, Tunisia and Sudan but they are not specialists and the specialist work now depends on Libyans," said Ibrahim al-Malhouf, Es Sider port's acting director.

While Es Sider, Ras Lanuf and the port of Zueitina had been blockaded, Brega remained open with reduced capacity. Mohamed Aoud, a senior official at Sirte Oil Company based in Brega, said the situation had improved since the LNA advance.

"Some foreign employees have even contacted us with a view to coming back," he said, adding that the company's foreign workforce has been reduced from 700 to just over 250.

Sirte Oil Company is hoping for more financial support to raise its production from about 35,000 bpd currently to 90,000 to 100,000 bpd, Aoud said.

"Of course we have financial problems," he said. "The financial authorities need to place greater importance on oil, because it is the country's only income." —Reuters