(This version of the story has been refiled to fix typo in byline, no changes to text)
By Ayman al-Warfalli and Aidan Lewis
BENGHAZI, Libya/TUNIS (Reuters) - Libya’s National Oil Corporation (NOC) said storage capacity at Ras Lanuf port had been cut by 400,000 barrels after a second crude oil tank was set on fire amid fighting between rival factions for control of two key export terminals.
The NOC warned that the blaze that broke out at storage tank No. 2 early on Sunday could spread to three further tanks, which would “stop exports from Ras Lanuf port completely”.
Such an outcome would be a major blow for Libya’s oil industry, which despite continuing political turmoil had staged a partial recovery over the past two years, raising national production to just over one million barrels per day (bpd).
Fighting over Ras Lanuf and the neighboring oil port of Es Sider began on Thursday, when an armed force opposed to Khalifa Haftar’s Libyan National Army (LNA) stormed the terminals.
The attack led the NOC to shut the ports and evacuate its workers, declaring force majeure on exports. Both terminals had been badly damaged in previous fighting, but had resumed operations after the LNA took control of them in September 2016.
Before the latest clashes there were five functioning crude oil storage tanks at Ras Lanuf, the NOC said in a statement. Tank No. 12 was set alight on Thursday, and tank No. 2 caught fire on Sunday, reducing storage capacity at Ras Lanuf from 950,000 barrels to 550,000 barrels, it said.
Tank No. 2 held 200,000 barrels of crude before it was hit, and No. 12 held 240,000 barrels, a fire fighting official said, adding that crews were running out of foam to contain the blazes.
The NOC earlier put the immediate production loss from fighting at the ports at 240,000 barrels per day, expected to rise to 400,000 bpd if they remained shut.
LNA sources have said they are preparing a counter-offensive, and there have been daily air strikes in the area since Thursday.
The NOC reiterated a call for Ibrahim Jathran, the armed group leader who announced Thursday’s attack, to withdraw immediately from the ports, warning of further damage to key infrastructure.
Jathran had controlled and blockaded the ports before losing them to the LNA two years ago. He has said he wants to overturn the “injustice” exacted by the LNA on residents of the oil crescent since then.
He issued a video statement on Sunday saying he would deliver the ports to the control of the internationally recognized Government of National Accord (GNA) in Tripoli, which Haftar opposes, and to the NOC.
However, the head of the GNA has condemned Thursday’s attack and disassociated the GNA from it, while the NOC has castigated Jathran for his previous blockades, which it said lost Libya tens of billions of dollars in export revenues.
Jathran said his forces were holding 20 prisoners whom they would hand over to the Red Crescent, and called for the formation of a committee of tribes from eastern and western Libya to mediate an end to the fighting.
The LNA has accused the Benghazi Defense Brigades (BDB), a group of anti-Haftar combatants that has previously tried to take the oil crescent and advance on Benghazi, of participating in Thursday’s attack.
Haftar took full control of Benghazi late last year, after a three year military campaign named “Operation Dignity” against Islamists and other opponents.
Writing by Aidan Lewis; Editing by Ros Russell and Daniel Wallis