November 2, 2017 / 9:07 PM / in 15 days

UPDATE 2-Libya's NOC links 50,000 bpd shutdown to Wintershall dispute

(Adds details throughout, background, no response from Wintershall)

By Aidan Lewis

TRIPOLI, Nov 2 (Reuters) - Libya’s National Oil Corporation (NOC) said on Thursday that production at the northeastern As-Sarah oilfield had dropped by 50,000 bpd due to protests that it linked to a contract dispute with German operator Wintershall .

Protesters in Jakhira oasis said on Wednesday that they had blockaded production, accusing the NOC of failing to respond to local demands for development and jobs.

Wintershall confirmed earlier on Thursday that protesters had demanded a closure of some of the production from oilfields in its concession areas.

The NOC has been in a contract dispute with Wintershall that shut down output from the company’s concessions earlier this year. They struck an interim deal to resume production in June.

On Thursday, the NOC said it was “very concerned that Wintershall decided to shut production without consulting NOC.” It said the action was depriving Libya of $3 million a day.

“We have demanded an explanation, particularly since the protests at Jakhira are explicitly intended to block the implementation of new contract terms for Wintershall,” said the NOC statement, which was attributed to Chairman Mustafa Sanalla.

“We will not allow Wintershall to go back on its contractual commitments to the people of Libya.”

The NOC said it could discuss support for the local community once production resumed, but had “nothing to discuss while production is shut in”. Other communities had rejected efforts to involve them in the blockade, it said.

Oil output in Libya has been repeatedly hampered by protests and armed blockades as local groups across the country press financial and other demands.

Wintershall, BASF’s oil and gas subsidiary, said earlier that it was in “close contact with the community and NOC” and could not comment further at that time.

No one at the company was immediately available to comment on the NOC statement.

In its dispute with Wintershall, the NOC contended that the German company had failed to honour a 2010 memorandum of understanding to convert its concessions to EPSA IV terms, or the standard NOC contract that governs deals with international oil companies in Libya.

Wintershall said at the time that its concession deals with Libya were still valid.

Sanalla said on Thursday that the new agreement would place “extensive corporate social responsibility and environmental obligations on Wintershall”.

“Wintershall will not continue to produce oil under different terms from every other international oil company working in the country. If it wishes, the new agreement will be finalised very soon,” he said.

“If it does not wish to implement the new terms, it is free to leave.” (Reporting by Aidan Lewis; Additional reporting by Patricia Weiss in Frankfurt; Editing by Alison Williams)

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