Libyan crude still attracting hefty freight premiums

Many ship owners remain wary about transporting Libyan cargoes due to security concerns and these stems are attracting a hefty freight premium as a result. There has been a lot fighting around ports between rival militias in recent months, notably Es Sider and Ras Lanuf in June.

Even though the situation is calm for now, concerns persist and, according to one shipowner, “some companies have to re-review their security policy and it takes them time to reconvene to discuss and clear.”

There are three or four shipowners who will not call at Libyan ports and others will view cargoes on a case by case basis, said a shipbroker.

This means that at times Libyan crude stems can attract a premium of Worldscale 2.5 – 10 points over cargoes loading from non-Libyan ports in cross-Mediterranean voyages, depending on how many Libya-capable vessels are open in the region, sources said.

“We have no issues as long as we have a decent Libya clause but others have to go through the motions and see things stabilize,” said another shipowner.

This clause will cover cancellation costs, such as bunkers expended on the voyage to the port and for waiting times.

The other issue is the rivalry between the government in Tripoli and its counterpart in the east of the country, which also claims authority. This has threatened to potentially put shipowners at odds with the Tripoli-based NOC if they were to take a cargo being marketed by its rival in the east, sources said.

Recently, the self-styled Libyan National Army took control of the eastern ports and prevented the NOC in Tripoli from exporting any cargoes, sources said. But since then, the outlook has improved, though, production remains vulnerable to sudden disruptions due to security, political uncertainty and even staffing issues.