18-08-2018

Tankers: Libyan crude oil stems still fetching hefty freight premiums

Libyan crude oil output has risen above 1 million b/d for the first time in two months, but many shipowners remain wary about transporting Libyan cargoes due to security concerns and these stems are attracting a hefty freight premium as a result, sources said Friday.

Firstly, there are still security concerns for some shipowners as there has been a lot fighting around ports between rival militias in recent months, notably Es Sider and Ras Lanuf in June.

Even though the situation is calm for now, concerns persist and, according to one shipowner, “some companies have to re-review their security policy and it takes them time to reconvene to discuss and clear.”

There are three or four shipowners who will not call at Libyan ports and others will view cargoes on a case by case basis, said a shipbroker.

This means that at times Libyan crude stems can attract a premium of Worldscale 2.5 – 10 points over cargoes loading from non-Libyan ports in cross-Mediterranean voyages, depending on how many Libya-capable vessels are open in the region, sources said.

Statoil took a vessel on subjects Thursday for an 80,000 mt crude stem loading out of Es Sider terminal off August 25-26 dates at the level of w127.5, w7.5 above the cross-Mediterranean route, sources said.

“We have no issues as long as we have a decent Libya clause but others have to go through the motions and see things stabilize,” said another shipowner.

This clause will cover cancellation costs, such as bunkers expended on the voyage to the port and for waiting times.

The other issue is the rivalry between the government in Tripoli and its counterpart in the east of the country, which also claims authority. This has threatened to potentially put shipowners at odds with the Tripoli-based NOC if they were to take a cargo being marketed by its rival in the east, sources said.

Recently, the self-styled Libyan National Army took control of the eastern ports and prevented the NOC in Tripoli from exporting any cargoes, sources said.

But since then the outlook has improved, though production remains vulnerable to sudden disruptions due to security, political uncertainty and even staffing issues.

Output rose above 1 million b/d this week, marking a major reversal in fortunes from early June when fighting at key oil export terminals sent production into freefall.

National elections planned for December further add to the unpredictability and uncertainty.

Source: Platts

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