Libya's National Oil (NOC) has reached an interim agreement to restart production in German oil firm Wintershall’s concession areas NC 96 and NC 97, ending operational shutdown.

Under the agreement, Wintershall will be offered an amount of production sufficient to cover its costs, while the remaining production will be allocated to NOC.

NOC chairman Mustafa Sanalla said: “NOC has reserved all its legal rights to ensure that Libya’s interests are upheld.

“This shutdown was enormously costly to Libya. I hope we can now get on with the business of meeting our oil production targets without interruptions.”

“Total oil production in Libya as of today is 830,000 barrels a day, and we are targeting one million barrels by the end of July as a result of the resumption of production from the Wintershall and linked Abouatiffel fields, as well as from 103 A and Nafoora.”

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During the agreement period, the parties will also work towards resolving their dispute regarding the legal framework governing the petroleum operations.

In 2010, NOC signed a memorandum of understanding (MoU) with Wintershall to extend the latter’s 50-year concession for areas NC-96 and NC-97, and to convert to exploration and production sharing agreement (EPSA) intravenous (IV) terms consistent with other foreign operators in Libya.

"This shutdown was enormously costly to Libya. I hope we can now get on with the business of meeting our oil production targets without interruptions."

Libya’s Petroleum Facilities Guards blockaded the Zuetina port, which is used to export production from the concessions.

After the roadblock was cleared, Wintershall resumed production last September, and later shut down production in March this year.

NOC claimed that despite conducting a series of meetings to implement the MoU, Wintershall did not honour its commitments.

It further noted that production and exports would have continued in the event of Wintershall fulfilling the terms of the agreement through seeking a resolution by arbitration.

Image: NOC signs interim agreement to restart production from NC-96 and NC-97 concessions in Libya. Photo: courtesy of National Oil Corporation.