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