Glencore Loses Exclusive Rights to Market Two Libyan Oil Grades

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Glencore, the Switzerland based oil and commodity trading company has lost its exclusive rights to market two commercial grades export grade. In 2015, the company secured a deal with the National Oil Corporation (NOC) for buying half of the then oil production capacity of 400,000 bpd. The deal gave the company to trade 230,000 bpd from Messla and Saris oil grades.

Libya, the oil rich North African state, was stuck in a violent armed civil war, where armed militia have been fighting for control over the county’s oil facilities. The crisis repelled investors away for the country’s oil sector. Glencore, under these exceptional circumstances was one of the very few oil firms who showed willingness to work with the country. As a result in 2015 it gained exclusive rights to market Messla and Sarir Grades.

The country is undergoing political negotiations as part of peace talks, investor confidence in the country has risen. Companies like Royal Dutch Shell and BP have returned back to the country and have started lifting from the country in 2018.

The two grades are open for new contract negotiations now. A fifth of the nation’s output comes from these two grades with total amount surmounting to 953,000 barrels per day. It’s still below the pre-conflict level of 1.6 million barrels per day. These two grades proved life-saving for the country which witnessed a massive reduction in oil production following the political crisis. The grades which were exported from Marsa el Hariga, the Libyan port was responsible for bulk of the contributions to government’s coffers. 220,000 barrel per day capacity Ras Lanuf Refinery in Libya, which now stands idle ran on these crude grades.

Other crude streams were never allotted to a single oil marketing company for such an extended period.

BP is due to take 1 million barrels in mid-January for the Crescent Moon tanker. Shell will also lift one cargo from Marsa el Hariga.

The country is still far from settlement of its political crisis. Recently tribesmen and members of the armed forces, The Petroleum Facilities Guard has shut the country’s largest El Sharara field. The shutdown was over the fire state of government pay and services is costing the country $32.5 million per day in lost output.  The NOC’s combined average production has reached 1.107 million bpd in 2018 while revenues reached US$24.4 billion. Libya wants to double these levels to pump 2.1 million bpd by 2021.

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