Libya's $60 bil­lion in lost oil high­lights risk of failed state

The Pak Banker - - MARKETS/SPORTS -

Libya's ri­val political fac­tions must quickly form a unity govern­ment to stop the coun­try with Africa's largest oil re­serves from col­laps­ing into a "failed state," Na­tional Oil Corp. Chair­man Mustafa Sanalla said. Libya has lost $60 bil­lion in pro­duc­tion and ex­ports as a re­sult of dis­rup­tions at oil ports and fields over the last three years, and at­tacks by Is­lamic State mil­i­tants have caused "tremen­dous" dam­age to the oil in­dus­try in the last two weeks, Sanalla said in an emailed state­ment.

"Their ob­jec­tive is to pre­vent the new govern­ment from sta­bi­liz­ing the econ­omy," he said of the mil­i­tants. "They are not try­ing to oc­cupy oil fa­cil­i­ties, only to dis­able them. Their at­tacks have been very tar­geted, and they have man­aged to achieve a con­sid­er­able level of dam­age with very few peo­ple. We should ex­pect more such at­tacks."

Libya pro­duced about 1.6 mil­lion bar­rels a day of crude be­fore the 2011 re­bel­lion that ended Moam­mar Al Qaddafi's 42-year rule. It's now the small­est pro­ducer in the Or­ga­ni­za­tion of Pe­tro­leum Ex­port­ing Coun­tries, pump­ing 362,000 bar­rels a day, Sanalla said Mon­day in an in in­ter­view in Lon­don. Since Qaddafi's ouster and death, Libya has split into two sep­a­rately run re­gions, one in the west and an in­ter­na­tion­ally rec­og­nized govern­ment in the east. Var­i­ous armed mili­tias also com­pete for con­trol of oil fa­cil­i­ties.

The Na­tional Oil Corp. in the west, headed by Sanalla, is rec­og­nized by traders such as Glen­core Plc and Vi­tol Group as the of­fi­cial mar­keter of Libyan oil. The east­ern govern­ment has set up a sep­a­rate NOC ad­min­is­tra­tion, which rep­re­sents Libya in mat­ters re­lat­ing to oil in­clud­ing OPEC. Rep­re­sen­ta­tives of the na­tion's two du­el­ing ad­min­is­tra­tions took a ten­ta­tive step to­ward eas­ing the tur­moil when they agreed on Jan. 19 to form a 32-mem­ber cab­i­net, in talks backed by the United Na­tions. "With­out a sin­gle govern­ment, there will be nei­ther se­cu­rity nor sta­bil­ity," Sanalla said in the state­ment. "Ex­trem­ists will step into the vac­uum, and Libya will de­cline fur­ther to law­less­ness and chaos."

The Pe­tro­leum Fa­cil­i­ties Guard, a force loyal to the govern­ment in east­ern Libya, has failed to pro­tect the na­tion's oil fa­cil­i­ties, and at­tacks by mil­i­tants have cost the coun­try more than half of its stor­age ca­pac­ity for oil, he said.

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