Libyan oil out­put hin­dered by bud­get cuts, NOC head says

Arab News - - BUSINESS -

LON­DON: OPEC mem­ber Libya’s abil­ity to re­build its oil out­put will be hin­dered by con­tin­u­ing con­straints on Na­tional Oil Cor­po­ra­tion’s (NOC) bud­get, the state-owned group’s head said.

NOC re­ceived only 50 per­cent of its cap­i­tal expenditure bud­get from the Libyan gov­ern­ment in 2017, Mustafa Sanalla told a Chatham House con­fer­ence in Lon­don on Tues­day.

“In terms of in­vest­ment, we as­sume that this year, as in 2016 and 2017, po­lit­i­cal ac­tors will at­tempt to use con­trol of the state bud­get process to con­trol NOC,” Sanalla said.

Crimp­ing the bud­get of NOC, which em­ploys more than 60,000 peo­ple and helps pay the salaries of most work­ers in Libya, is non­sen­si­cal be­cause in­vest­ments could help re­store its pre-civil war oil ca­pac­ity of around 1.6 mil­lion bar­rels per day.

Un­der Libyan law, NOC hands over oil rev­enues to the Cen­tral Bank and is then al­lo­cated its bud­get by the Libyan gov­ern­ment.

Any fur­ther in­vest­ments and any such at­tempts will be closely watched by the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries. Libya told OPEC in Novem­ber there was still a lot of un­cer­tainty around its pro­duc­tion lev­els but that its 2018 out­put was likely to re­main around 1 mil­lion bpd.

“If NOC is lost, Libya will take a long time to be put back to­gether,” Sanalla told the con­fer­ence.

While NOC has to a large ex­tent suc­ceeded in rais­ing pro­duc­tion lev­els in re­cent months by ne­go­ti­at­ing with var­i­ous groups to end port and pipe­line block­ades and raise oil out­put, se­cu­rity threats to in­fra­struc­ture re­main.

Sanalla said he hoped that fur­ther block­ades in the east of the coun­try would be avoided, ex­press­ing faith in the Libyan Na­tional Army (LNA), which ended a block­ade by the forces of Ibrahim Jathran on key ex­port ports in Septem­ber 2016.

“I don’t be­lieve the LNA and its lead­er­ship will now al­low the tac­tics of Jathran to be used un­der their su­per­vi­sion, es­pe­cially be­cause of their dev­as­tat­ing eco­nomic ef­fect,” he said.

The LNA is the dom­i­nant mil­i­tary force in east­ern Libya, led by mil­i­tary com­man­der Khal­ifa Haf­tar.

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