Libya’s confrontation undercuts efforts to raise oil output
Tunis - A showdown between eastern and western Libya over who controls the country’s oil sector could adversely affect production and harm efforts to resolve the conflict.
The confrontation could lead to an escalation of the relatively low-intensity Libyan conflict and jeopardise the neutrality of state bureaucracies handling the oil sector production, mainly the National Oil Corporation (NOC) and the Central Bank of Libya, which funnel revenues from foreign oil sales.
The NOC’s neutrality and role as the single steward of the oil wealth are being threatened by the UN-brokered Government of National Accord (GNA) in Tripoli and its rivals in the east, backed by the internationally recognised House of Representatives (HoR).
The GNA, through its Presidential Council, announced its intention to strip powers from the NOC by sharing control of the energy industry. It said it was assuming the authority to supervise energy sector investments and exploitation of the country’s oil resources, including the approval or cancellation of contracts.
NOC Chairman Mustafa Sanalla challenged the move, asking the Presidential Council to withdraw its resolution. “It has exceeded its authority,” he said. “Only the House of Representatives, the legislature, has the power to make these changes.”
NOC and Sanalla have the upper hand, given the company’s experience and the neutrality of its top managers, which they emphasised could guarantee Libya has an economic lifeline. Economists argue that safeguarding the neutrality and bureaucratic skills of the NOC and central bank would eventually ease the country’s conflict.
All Libyans benefit from the oil revenues. Even the dozens of rival militias in Tripoli and elsewhere receive salaries and other perks from the central bank.
Sanalla reported in March that Libya should see a steady increase in oil output this year — reaching the highest production level since 2014. Libya is producing 715,000 barrels per day (bpd) and expects to expand output to nearly 1.3 million bpd by the end of 2017, NOC statements said.
The strife-plagued North African country needs partnerships with foreign oil firms to develop its energy industry. That requires maintaining the NOC’s neutrality and keeping it as the country’s sole option for foreign partners.
The NOC said it has identified “illegal” efforts to sell crude oil and warned potential buyers to avoid such contracts.
Rivals of the Tripoli-based government attempted to sell oil in defiance of NOC, which has its headquarters in Tripoli, but were set back by UN resolutions.
The international community has bolstered NOC’s role with ambassadors to Libya from the United States, China, Russia, Britain and France, saying in a joint statement that they “underscore that petroleum infrastructure, production, export and revenues belong to all Libyan people and must remain the exclusive stewardship of NOC”.
The statement came after forces led by Field Marshal Khalifa Haftar regained control of the key oil ports of Sidra and Ras Lanuf on March 14th. Haftar’s allies in the east accused rivals in the west of backing extremist Islamist militias, which seized the ports earlier in the month.