Written by oil and economic expert Abdulmonsef Al-Shalawi<\/p>\n\n\n\n
In Libya, whenever an oil field or port is shut down, there is frequent discussion about the National Oil Corporation (NOC) declaring force majeure<\/strong>, as though this were merely an administrative or political procedure.<\/p>\n\n\n\n In reality, the term has significant legal, commercial, financial, and economic implications, and is widely used in international oil and trade contracts.<\/p>\n\n\n\n Force majeure<\/strong> simply refers to the occurrence of an event beyond the reasonable control of a contracting party, making the performance of some of its contractual obligations impossible or substantially impracticable. In the oil sector, this may result from the closure of a field, pipeline, or port, security disturbances, or coercive actions that prevent production or exports.<\/p>\n\n\n\n Accordingly, the NOC\u2019s declaration of force majeure does not mean that it wishes to halt production. Rather, it means that circumstances beyond its control have made it impossible to fulfill some of its obligations, particularly toward buyers and partners. The primary legal and commercial purpose is to protect the NOC from certain claims and compensation demands arising from the failure to fulfill obligations that have become impossible to perform because of such an event, in accordance with the terms of the contract and applicable law.<\/p>\n\n\n\n The NOC has previously taken such action. For example, it declared force majeure at the Sharara field on January 7, 2024, after protesters shut down the field and halted crude supplies to the Zawiya port. It had also declared force majeure at Sharara in April 2022, when pressure on workers led to a production shutdown and made it impossible to fulfill contractual obligations.<\/p>\n\n\n\n Force majeure is not the problem\u2026 it is a consequence of the problem.<\/strong><\/p>\n\n\n\n The real problem begins before force majeure is declared, when a field, port, or pipeline becomes a means of exerting pressure or negotiating.<\/p>\n\n\n\n On September 15, 2026, the NOC announced that the closure of the valve on the main Hamada\u2013Zawiya shipping pipeline had led to the suspension of production and operations at the Hamada and Al-Tahara fields and the NC5 station. It warned that it might have to declare force majeure if the shutdown continued or extended to other fields.<\/p>\n\n\n\n At the same time, Libya\u2019s production remained around 1.4 million barrels per day, according to statements by the NOC, despite the recent shutdowns and disruptions.<\/p>\n\n\n\n Here lies the paradox: Libya is facing these disruptions at a time when the international oil market is experiencing significant tensions and high prices. Brent crude surpassed $100 per barrel in mid-September 2026, reaching approximately $104.82 on September 17.<\/p>\n\n\n\n This means that the timing of a shutdown could prevent the country from benefiting from favorable pricing conditions in the global market.<\/p>\n\n\n\n What does an oil shutdown mean for citizens?<\/strong><\/p>\n\n\n\n Some may say, \u201cShut down the oil\u2014we have gotten nothing from it.\u201d<\/p>\n\n\n\n This statement may be understandable as a reflection of citizens\u2019 frustration, but economically, it overlooks a fundamental reality: in Libya, the impact of oil does not stop at the NOC; it extends to most aspects of the state and society.<\/p>\n\n\n\n An oil shutdown means, to varying degrees:<\/p>\n\n\n\n The issue is particularly sensitive in Libya because the economy remains heavily dependent on oil. The International Monetary Fund (IMF) confirms that the outlook for the Libyan economy continues to be dominated by developments in the oil sector, and that heavy reliance on oil exports and the import bill leaves the economy highly exposed to domestic and external shocks. The IMF also noted that disruptions to oil production were among the reasons for weak economic performance in 2024.<\/p>\n\n\n\n The state\u2019s dependence on oil also intersects with electricity and fuel. The IMF estimated Libya\u2019s total energy subsidy bill at around $17 billion in 2024, equivalent to approximately 35% of GDP, while Libya continues to rely heavily on fuel imports despite being an oil-producing country.<\/p>\n\n\n\n A shutdown does not only harm the state; it also undermines the value of the oil itself.<\/strong><\/p>\n\n\n\n There is another aspect that is less apparent to citizens.<\/p>\n\n\n\n International buyers do not purchase Libyan oil based solely on quality and price. They also care about the reliability of supplies and the ability to honor contracts.<\/p>\n\n\n\n Repeated shutdowns expose Libya to risks that go beyond the temporary loss of production barrels. They can increase the risk premium, undermine commercial confidence, complicate future contracts, and potentially raise the cost of financing and investment in the sector.<\/p>\n\n\n\n Therefore, keeping oil out of conflicts is not merely a political demand; it is a national economic and commercial interest.<\/p>\n\n\n\n What about the National Oil Corporation?<\/strong><\/p>\n\n\n\n It is important here to distinguish between managing the oil sector and circumstances imposed upon it from outside.<\/p>\n\n\n\n The NOC is responsible for production, operations, maintenance, exports, marketing, and managing oil-sector relationships and contracts. However, it cannot, on its own, prevent the forced closure of a field, protect a pipeline from every form of interference, or resolve the political and security divisions surrounding the sector.<\/p>\n\n\n\n At the same time, maintaining production at approximately 1.4 million barrels per day amid a complex political, security, and financial environment, and despite repeated attempts to shut down operations, reflects an operational and professional capacity that should not be overlooked.<\/p>\n\n\n\n Conclusion<\/strong><\/p>\n\n\n\n The declaration of force majeure is not an announcement of the NOC\u2019s desire to halt oil production. Rather, it is primarily a legal and commercial tool for protecting obligations and contracts when their fulfillment becomes impossible due to events beyond its control.<\/p>\n\n\n\n As for the oil shutdown itself, in the Libyan context, it does not merely stop the flow of crude. It puts pressure on public revenues, foreign currency, imports, salaries, services, investment, and international confidence.<\/p>\n\n\n\n Therefore, the question that should be asked is not only, \u201cWhat has the citizen benefited from oil?\u201d\u2014a completely legitimate question\u2014but also:<\/p>\n\n\n\n Is addressing shortcomings in the management of oil revenues achieved by shutting down the source that finances the state, or by reforming revenue and expenditure management, diversifying the economy, and strengthening institutions while keeping production and exports away from conflict?<\/strong><\/p>\n\n\n\n Oil is an exhaustible resource, yes. But at the present stage, it still represents the backbone of the Libyan economy. Protecting it does not mean defending a particular institution; it means protecting a national resource whose impact touches the lives of every citizen.<\/p>\n\n\n\n From this perspective, the NOC\u2019s continued efforts to maintain production, operations, and exports despite divisions, disruptions, funding shortages, and multiple pressures deserve to be viewed within their proper professional context. The institution can be criticized, held accountable, and developed, but it operates in an exceptional environment and remains, to a considerable extent, capable of keeping the lifeline of the Libyan economy open.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Written by oil and economic expert Abdulmonsef Al-Shalawi In Libya, whenever an oil field or port is shut down, there is frequent discussion about the National Oil Corporation (NOC) declaring force majeure, as though this were merely an administrative or political procedure. In reality, the term has significant legal, commercial, financial, and economic implications, and […]<\/p>\n","protected":false},"author":13,"featured_media":258488,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"iawp_total_views":0,"footnotes":""},"categories":[683],"tags":[613,614],"class_list":["post-258487","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economic-articles","tag-libya","tag-oil"],"acf":[],"yoast_head":"\n\n