Libyan oil depots suffer catastrophic blow

Libya's National Oil Corp. said Monday it lost two of the five storage tanks at the Ras Lanuf port after militants stormed the facility last week. As a result, the NOC said its storage capacity was lowered from 950,000 barrels to 550,000 barrels.

The fire from one of the damage storage tanks is in danger of spreading to three others spared so far.

"This incident will result in the loss of hundreds of millions of dollars in construction costs, and billions in lost sales opportunities," the NOC stated. "Rebuilding the tanks may take years, especially in current security circumstances."

The NOC attributed the attacks to a militia led by Ibrahim Jadhran, who opposes the national army.

Libya declared force majeure on some crude export contracts last week. Force majeure is a contractual condition related to circumstances beyond the control of the parties involved.

"NOC calls again for the immediate withdrawal of Ibrahim Jhadran and his gangs from the port, cessation of military operations and the provision of support and assistance to fire-fighting teams trying to reach the tanks still ablaze," its statement read.

The NOC evacuated staff from both Sidra and Ras Lanuf terminals last week. The loss in oil production is around 240,000 barrels per day, about a quarter of the recent production level.

Libyan oil production has been hampered by conflicts stemming from civil war that erupted in the wake of the Arab Spring movements earlier in the decade. Intense fighting near export terminals in early 2015 left oil storage depots ablaze and shut in exports for about a month.

Libya is a member of the Organization of Petroleum Exporting Countries and on the sidelines of a collective agreement to curb production to stabilize a market recovering from the collapse in oil prices in early 2016.

OPEC economists said in their latest monthly market report that Libyan crude oil production last year improved 109.5 percent compared to 2016. Secondary sources reporting to OPEC said Libya produced an average of 955,000 barrels per day.