UPDATE 2-Libya prepares to start oil exports at 2nd eastern port

Mon Apr 28, 2014 1:19pm EDT

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By Ulf Laessing and Aziz El Yaakoubi

TRIPOLI/MARRAKESH, April 28 (Reuters) - Libya is lifting force majeure from the eastern Zueitina oil port on Monday, state-run National Oil Corp (NOC) said, paving the way to restart exports at a second port after a deal with rebels to unblock major terminals.

Marketing of the oil in Zueitina's storage tanks will start from Tuesday after Libya lifted the waiver of its oil contracts, NOC spokesman Mohammed El Harari said.

Diplomats expect both sides to implement the deal eventually, because Libya badly needs the oil revenue, but tactical manoeuvres and mutual mistrust are likely to cause further delays, with two other ports still firmly closed.

In a sign that more talks are needed, Industry Minister Suleiman al-Fitouri said on Monday the rebels were making more financial demands.

"Things are stumbling," he told Reuters. "They are making tough conditions, and the government may not concede."

At Zueitina, it was not clear when the first tanker would arrive. A maintenance team was still assessing the damage and there were some technical difficulties, a port source said. Several million barrels of oil are stored in the tanks.

Zueitina, with a capacity to ship 70,000 barrels per day (bpd), is one of four eastern ports that are supposed to reopen after the government reached an agreement with rebels who had been controlling them since summer.

The 110,000 bpd Hariga port in Tobruk is the only one so far to have reopened since the agreement three weeks ago. Zueitina was also meant to restart business, but the government said it was delayed by technical problems due to the long closure.

The larger terminals Ras Lanuf and Es Sider were also meant to reopen within four weeks, but there have been delays as the rebels have accused the government of not fulfilling all the parts of the deal, including paying financial compensation.

Under the agreement, the rebels will be reintegrated into the state oil security force, from which they defected last summer when they occupied the ports to press for a share of oil export revenue.

Al-Fitouri said the government had agreed to pay salaries to those guards, but the rebels had inflated the sums. "I can't say how much (they demand), but I can say that it is higher than salaries," he said on the sidelines of an Arab meeting in Morocco.

Libya had produced around 1.4 million bpd before last summer, with the four ports handling more than 700,000 bpd in exports.

The dispute is only part of the widespread disruption in the OPEC producer, where the government cannot control militias who helped oust former strongman Muammar Gaddafi in 2011 but then held on to their weapons and have made demands by seizing oilfields or government ministries. (Editing by Mark Potter and Jane Baird)

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