Libya’s National Oil Corporation (NOC) is restarting partial oil production and exports by lifting an eight-month force majeure on what it calls secure terminals and facilities.

Operating companies have been instructed to resume work at selected fields but the ban is set to remain in place at facilities where rebel fighters have control.

Challenge for Opec+

The decision comes after eastern-based warlord General Khalifa Haftar said on Friday his forces would lift the eight-month blockade of the main oil ports and producing fields.

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Any full-scale resumption of Libyan oil operations is bound to undermine efforts by Opec and allied producers to help sustain a faltering oil market through output cuts in the wake of the Covid-19 pandemic.

Haftar's self-styled Libyan National Army (LNA) and allied forces, including mercenaries from Russia's Wagner Group, control some of Libya's largest oilfields and key export terminals.

The move signals an softening of the NOC position as the state-owned company had previously rejected any return to operations until the rebels had left the facilities, citing the safety of its staff.

Force majeure 'continues' - NOC

"Force majeure continues in oilfields and ports where the presence of fighters from Wagner and other armed groups that obstruct the activities and operations of NOC is confirmed," NOC said in a statement.

NOC did not say which ports will resume or how much of the shut-in production would hit the market.

Arabian Gulf Oil Company, a major operator that produces about 290,000 barrels per day and exports its crude via Hariga port in the east, said it was restarting production.

However, Russia’s Wagner Group holds sway over some of Libya’s largest oil deposits, including Sharara, the country’s biggest.

Long-running blockade

Haftar, whose forces control oil-rich eastern regions, choked off Libya’s oil production and exports in January after his army suffered a number of defeats at the hands of forces loyal to the internationally-backed Government of National Accord (AGN) based in Tripoli.

The blockade has seen Libyan overall output plummet from over 1.2 million bpd to around 80,000 bpd.

The blockade by eastern forces has cost Libya $9 billion in lost revenue so far this year, according to the Tripoli-based Central Bank of Libya.

"It was decided to resume production and export of oil with all the necessary conditions and procedural measures that ensure a fair distribution of its financial revenues," Haftar said on Friday.

His decision came after hundreds protested in the eastern city of Benghazi, one of Haftar's strongholds, and other cities over corruption, power cuts and shortages in petrol and cash.

Oil revenue distribution

GNA's deputy prime minister, Ahmed Maiteeg, said the restart of operations would involve setting up a new committee to oversee revenue distribution. The committee would co-ordinate between the warring sides to prepare a budget and transfer funds to cover payments and deal with the public debt, he said.

NOC said the conduct of Libyan financial affairs and the budgeting process were political issues outside its jurisdiction, emphasising it will operate with complete transparency in oil sales proceeds.

The latest developments come after GNA Prime Minister Fayyaz al Sarraj said last week he was to stepping down by the end of October amid moves by the United Nations to arrange peace talks.

Political analysts expect Sarraj's departure to lead to political jockeying among other senior figures in Tripoli to succeed him.

Libya has been in perpetual turmoil since the 2011 NATO-backed uprising that ended 42 years of rule by strongman Muammar Gaddafi.