No Libyan crude cargoes have been scheduled to load as of Friday despite it being more than a week since Libya's National Oil Corp lifted its force majeure on loadings out of the 340,000 b/d Es Sider and 220,000 b/d Ras Lanuf terminals.
Sources said this was due to restrictive freight costs due to the risk premiums, uncompetitive pricing and the need for quality and safety checks before any crude can be lifted likely to push the first loadings into August.
The announcement of an agreement between the government and protesters on July 8 was followed by news the next day that production had resumed at the 340,000 b/d Sharara field which feeds the Zawiya terminal and the 120,000 b/d Zawiya refinery. The lack of Sharara crude had meant that Zawiyah terminal could not export crude, despite being open for a number of months. As a result, NOC has been supplying the Zawiya refinery with crude supplies from other regions of the country.
UNKNOWN QUALITY OF 10 MILLION STORED BARRELS Production in Libya has jumped to 600,000 b/d as output at Sharara has gained traction, while NOC has stated that 10 million barrels is currently in Libyan storage facilities and ready for export.
Despite the large quantity of stored crude said to be ready for export, traders have expressed concerns regarding the unknown quality of the crude sitting in tanks due to potential settlement issues from being stored for a number of months, "there is a lot of oil there, but it's not clear what the quality is," a crude trader said. "It's been more than a year that it's been there in storage and it's not easy to buy something without knowing what you're buying."
The length of time equipment at the terminals has been idle has meant that inspection of key equipment needed to be carried out according to traders, which was expected to push first loadings from the terminal into August. "We might see something loading in August as people need to check tanks, lines etc and with the expected quality of what's stored I'm doubtful anything will load soon," said one trader.
HIGH FREIGHT RATES, NO FIXTURES
Despite reports of cargoes being offered and ships going on subjects at Es Sider and Ras Lanuf, shipping sources say no vessels have yet been fully fixed to load from the ports.
There have also been reports of ships going on subjects to load from Mellitah at high freight rates but sources say the majority have failed to get their subjects.
According to shipping sources, a 130,000 mt Suezmax cargo is currently being offered up by tender from Ras Lanuf, but a shipowner said that until the winners of the tender became clear they would not be interested in transporting the cargo.
"We will go to Libya under the right conditions and we have been approached about the Ras Lanuf tender. We won't consider doing that though until we know for sure who is lifting the cargo," said the shipowner.
The potential for an influx in Libyan cargoes into the market have been partly responsible for pushing up Black Sea-Mediterranean and Cross-Mediterranean Aframax rates, basis 80,000 mt, up Worldscale 42.5 to w130 this week.
JULY LIBYAN OSP REVISED DOWN
Libya's NOC issued an adjustment of its official selling prices for July on Thursday reducing levels of the selected crudes by between $0.20/b and $1.90/b.
The original OSPs, which saw levels for the country's crudes fall by between $0.05/b and $0.10/b from June, were criticized by some traders as being "out of touch" with the broader Mediterranean sweet crude market, where differentials for other sweet crudes have come under significant pressure in recent weeks.
The downward adjustment was seen by traders as not enough to incentivize an immediate lifting considering the political fragility and high freight rates, "these prices for Libya are for July, market will probably wait for better prices in August as you will have normal shipping rates and the situation might be more stable," said one trader.
