Al-Shalawi: Force Majeure in the Oil Sector… What Does It Mean Legally, Technically, and Economically?

Legal Meaning of Force Majeure

The term “force majeure” is not merely a media phrase used when security disturbances occur. Instead, it is a well-established legal and contractual mechanism in the international oil industry. When an exceptional circumstance beyond one’s control makes the fulfillment of contractual obligations impossible or prevents operations from continuing safely and normally, parties resort to this mechanism.

In the Libyan context, the concept of force majeure has clear legal basis. Article 20 of the Libyan Petroleum Law No. 25 of 1955 explicitly addresses force majeure, stating that rights and obligations of contracting parties in cases of force majeure are governed by provisions set forth in the contractual framework annexed to the law.

Force majeure does not mean cancellation of oil contracts or permanent nullification of obligations. Rather, it means a temporary suspension of affected obligations until the causes preventing their fulfillment cease to exist. This is crucial for public opinion as it indicates that a party may be temporarily unable to fulfill its contractual obligations due to circumstances beyond its control.

Operational Implications of Force Majeure

A declaration of force majeure does not signify the cancellation of oil contracts nor does it exempt any party from responsibilities forever. It means that an exceptional event has temporarily prevented fulfillment; thus, obligations are suspended in accordance with the contract and law until causes preventing their fulfillment cease.

For example, the National Oil Corporation (NOC) declared force majeure at specific fields like Al-Fayl and Sharara due to forced production stoppages or security issues. The NOC’s use of this mechanism demonstrates its legal protection of obligations in such scenarios.

Special Considerations for Al-Zawiya

The situation in Al-Zawiya differs from previous incidents because the attacks were not limited to sit-ins or roadblocks but included drone strikes on oil assets. Such attacks threaten both human safety and facility integrity, necessitating a thorough technical analysis.

Technically, shutting down a refinery is more than just a production decision; it’s a safety measure. Damage to a single tank should be evaluated not only in terms of product value but also for potential spread to other facilities.

The priority becomes clear: human safety takes precedence over facility or operational continuity. In such cases, technical decisions like “safe shutdown” may be necessary to prevent industrial disasters.

Security and State Responsibility

The National Oil Corporation (NOC) has primary responsibilities for securing its facilities based on its expertise in emergency plans, warning systems, security measures, etc. However, military response to drones, identifying attack sites, and pursuing those responsible fall under the state’s security, military, and judicial institutions.

Thus, declaring force majeure can also be seen as an institutional notification to the state that risk levels have reached a point beyond technical means alone, highlighting the importance of state-institutional coordination in maintaining safety.

Economic Implications

The damage caused by Al-Zawiya’s incident extends beyond just the affected facility. The refinery’s capacity is linked to larger oil systems, which could trigger cascading effects affecting domestic supply chains and external markets.

Moreover, repeated attacks on oil infrastructure increase “country risk,” impacting insurance costs, investment decisions, and international cooperation—all factors that directly affect Libya’s economic stability.

Military Response vs. Technical Measures

A significant irony is that while the public may question military responses to security threats, they should focus on technical measures like strengthening protection systems, enhancing early warning capabilities against drone threats, and reviewing business continuity plans at critical facilities.

Conclusion

The term “force majeure” represents a mechanism for legal protection rather than a threat. When continued operations pose unacceptable risks to personnel or facilities due to circumstances beyond control, declaring force majeure does not signify an abdication of responsibility but may constitute the exercise of that responsibility.

Ultimately, the goal is sustainable and safe oil production under state sovereignty for all Libyans. The NOC’s commitment to its technical role, sector neutrality, and avoiding political conflicts must be upheld alongside these responsibilities.