Shell and BP agreed to annual deals to buy Libyan crude, underscoring how the North African country’s recovering production and improving security are enticing some of the world’s largest oil companies.
Shell’s deal with Libya’s National Oil Corp. was the first of its kind since 2013, and Europe’s biggest oil company will load its first cargo under the contract within days, according to people familiar with the matter, who asked not to be identified because they’re not authorized to talk to the media. BP, which didn’t have a term deal in 2017, also reached an agreement for this year, the people said.
Libya pumped the most oil in four years in 2017 amid signs that the worst of a conflict that hobbled output was being resolved. While the return of Shell and BP to its list of customers would be good news for Libya, the country’s production remains well below where it used to be under the rule of dictator Moammar Qaddafi. Boosting output will also be challenging because Libya made a commitment to OPEC to limit supplies to reduce a global surplus.
Shell is set to start loading 600,000 barrels of crude from Zueitina port on Saturday, the company’s first direct loading from the North African country in years, two of the people said. A Shell spokesman wasn’t immediately able to comment, while BP spokesman David Nicholas declined to do so. Mustafa Sanalla, chairman of Libya’s National Oil Corp., didn’t answer phone calls seeking comment.
In August, Shell bought its first shipment of Libyan crude in five years in a spot deal. Neither company was on the NOC’s list of 2017 term buyers, which includes companies such as Vitol Group, Glencore Plc, Total SA and OMV AG, according to a document obtained by Bloomberg.
Libya’s oil production returned to about 1 million barrels a day earlier this month, following power disruptions at the Sharara field, the nation’s largest. Libya and Nigeria have committed to restrict their combined production to about 2.8 million barrels a day as part of a producer pact led by the Organization of Petroleum Exporting Countries to cut an oversupply.
Libya’s output averaged 828,000 barrels a day in 2017, the highest annual average since 2013, according to data compiled by Bloomberg.
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