The head of Libya’s National Oil Corporation has called on the central bank to free up more money for the energy sector to help boost production as he tries to rally investment from international oil companies for the struggling north African country.
Mustafa Sanalla, chairman of the NOC, said that oil production could jump almost 70 per cent by the second half of this year to more than 1.2m barrels a day if he can attract more money and defend the independence of one of Libya’s few functioning institutions.
“We can get production back towards 1.2m barrels a day but we need investment to be unlocked,” Mr Sanalla told the Financial Times in London, where he is due to meet oil majors and international officials this week. Before the 2011 revolution Libya’s output was above 1.6m b/d and has already more than doubled to about 700,000 b/d since September after the reopening of three major ports and a pipeline.
But the country remains beset by political divisions almost six years after the revolution that overthrew Colonel Muammer Gaddafi with help from Nato. Mr Sanalla argued that having rapidly increased oil production since September it had shown that it could “generate a very high rate of return” for the country from additional funding. “We need more money than we get from the central bank,” Mr Sanalla said.
“We are the only institution that can work across this difficult environment.” On Tuesday, he told a conference that he was lifting Libya’s “self-imposed moratorium” on overseas investment in new projects, but needs more funds to maintain the recent output increase. We need more money than we get from the central bank.
We are the only institution that can work across this difficult environment Mustafa Sanalla The recent rise in oil production and higher prices have helped boost the country’s depleted reserves but also pose a challenge to the Opec oil cartel, which agreed to cut output at the end of last year in an attempt put an end to a two-year long rout in prices. While Libya is an Opec member it was made exempt from the supply cuts alongside Nigeria, whose production has also been hit by violence and political strife.
Oil has risen about 20 per cent since late November to above $55 a barrel, boosted, in part, by the cuts. Mr Sanalla said he was confident of attracting “tens of billions” from international oil companies over the coming years to rejuvenate Libya’s oil sector, arguing that the security situation was improving in the country, with Islamic State ousted from the coastal city of Sirte at the end of last year. Companies may remain wary, however, with Libya’s output having recovered in the past before falling victim again to tribal and political upheaval.
Since fighting between rival military groups hit the capital in 2014, few countries have reopened embassies in Tripoli. The NOC has long fought to retain its independence, and Mr Sanalla called on the international community to continue defending its separation from politics, arguing that oil is too vital to the country’s economy to allow it to fall under the control of any faction.
Libya’s UN-backed Government of National Accord (GNA) in Tripoli has received strong support from the US but has struggled to muster widespread backing inside Libya. It is also unclear what approach the new administration of President Donald Trump will take to the country.
“The main issue is to keep NOC out of the political game, we are not a political chip,” Mr Sanalla said. “We work for the whole country; we keep the country united. It should be run by technocrats not ideologists. If the NOC becomes divided I think the country will also divide, for sure.”
As part of this push, Mr Sanalla said he wanted to see the Petroleum Facility Guards (PFG) — military units that have at times aligned with various warlords, but whose salaries are paid by the government — shrink in size and come under control of the NOC. He suggested that many PFG members, some of whom have served in militias, should be reassigned to the Libyan National Army (LNA).
The GNA is the only authority allowed to export oil but it has had to find ways to work with military commander Khalifa Haftar whose forces in the east of the country control the major ports. “The PFG needs to be restructured under the NOC,” Mr Sanalla said. “Before the revolution we did not have more than 4,000 PFG. Now there’s 27,000 on the payroll . . . though on the ground you cannot always see them. They are like ghosts.”