UPDATE 3-After deal, Libya's ports prepare to load oil tankers

Mon Apr 7, 2014 1:27pm EDT

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* Hariga, Zueitina ports expected to open first

* Deal calls for more talks on larger terminals (Adds quotes, colour, background, PVS TRIPOLI)

By Ayman al-Warfalli and Ahmed Elumami

ZUEITINA PORT, Libya/TRIPOLI, April 7 (Reuters) - Libya's Zueitina oil port prepared on Monday to load crude into tankers after the government reached a deal with rebels to reopen four terminals that insurgents have occupied since the summer.

The federalist rebels agreed on Sunday to end gradually their eight-month blockade of Zueitina, Hariga, Ras Lanuf and Es Sider ports, which account for around 700,000 barrels per day of the OPEC country's crude exports.

Brent crude fell $1.47 to a low of $105.25 per barrel before recovering to $105.72 by 1256 GMT, after news of an end to the port protest removed some of the supply worries affecting the oil market.

"The port is ready to start exporting at the present time or later at any time, and a maintenance unit team has already started work to receive the first tanker," said Abdulatif Al-Alam, operation coordinator at Zueitina.

Maintenance personnel, some of them foreign workers, wearing red jump suits and helmets were busy preparing pipelines at the 70,000 bpd-export terminal located 100 km west of Benghazi.

A Reuters reporters saw seven former rebel fighters next to their vehicle at the front gate - now protecting the port after being put back on the payroll under the government agreement. A group of ex-rebels could be also seen inside the port.

"The Zueitina oilfield has been restarted," said Ali Qadari, a former rebel fighter happy about the oil deal. "Things are moving forward seriously. Everything is fine now."

Alam said the port was awaiting orders from the state-run National Oil Corp to begin receiving customers and would be able to handle the same amount of cargo like before the closure.

Under the agreement with Tripoli's government, Zueitina and Hariga ports were expected to open immediately while the larger ports, Ras Lanuf and Es Sider with around 500,000 bpd capacity, will be reopened in two to four weeks after more negotiations.

But the manager at Hariga in Tobruk in the far east said he had received no confirmation to reopen and would need at least 10 days to prepare for tankers to load crude.

The remarks from the Hariga manager indicated how technical problems and ongoing negotiations over the two larger ports could still delay a full reopening of the North African state's oil supplies.

"It takes 10 days or two weeks at least to prepare the oil port to work again and to welcome customers and tankers to load oil," Hariga terminal manager Rajab Abdulrasoul told Reuters.

Tanks were full at 1.6 million barrels and are being used to feed the 20,000 bpd-refinery in Tobruk, he said during a port visit at the end of February.

The deal to end the port standoff will be a major boost for Libya's fragile government, which has struggled to impose its authority over a vast nation still in chaos nearly three years after the fall of dictator Muammar Gaddafi.

Still, the agreement did not address rebels' key political demands for more autonomy or sharing of oil revenues. Details were not clear about what remains to be negotiated over the two larger terminals.

TOUGH NEGOTIATIONS

The clash over control of Libya's oil resources was the starkest example yet of how far the government is unable to impose its authority over brigades of former rebels and militias who refused to disarm after Gaddafi's fall and often use their muscle to strong-arm the state.

The federalist rebel leader, Ibrahim Jathran, is a former anti-Gaddafi fighter who took command of facility guards protecting oilfields, refineries and ports. He defected with thousands of his men in the summer to seize three terminals.

Hariga had been taken over by a separate group of protesters who sympathized with Jathran's campaign for a larger slice of Libya's oil wealth for his eastern region, where many feel they have been abandoned by Tripoli for years.

The agreement calls for a commission to investigate corruption, for charges against Jathran's men to be dropped and for the former oil guards to receive their state salaries.

Tripoli's government often finds itself falling prey to rival bands of former rebels and militias who are loosely allied with competing political factions in the country's parliament. (writing by Patrick Markey; Editing by Erica Billingham, Dale Hudson and David Evans)

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