Stopping oil production at a Libyan eastern terminal and more imminent closures of oil facilities in the war-torn country following a budget conflict raised eyebrows at the UN.
On Monday, Libya’s National Oil Corporation (NOC) said it had suspended crude oil production and exports from the port of Marsa al-Hariga, citing Libya’s central bank’s refusal to disburse money set aside for the oil sector for several months.
“Continuous oil production and the maintenance of the NOC’s independence and impartiality remain an important cornerstone of Libya’s economic, social and political stability,” said the UN Support Mission in the country. “This is crucial for the government, which is called upon to improve the provision of basic services to the Libyan people.”
Oil is the cornerstone of the Libyan economy and the country’s only real source of income. Libya is currently governed by an interim government that includes a three-member presidential council and a cabinet. Its appointment in February during a UN-led process has revived hopes for stability in oil-rich Libya. The government has been entrusted with leading the country to general elections in December 2021.
For several years, the NOC has maintained its independence from Libya’s feuding political actors and has had the support of the international community. However, the NOC has recently faced attempts by the new interim government to step on the lawn.
Earlier this week, the NOC declared a force majeure – a contract clause referring to the company’s inability to meet its obligations due to extraordinary events – in the port of Marsa al-Hariga after several oil companies there failed to meet their production obligations due to accumulating debts, he said. NOC in an official statement.
The NOC held Libya’s central bank responsible for the interruption after failing to pay a budget of almost $ 223 million earmarked for the oil sector last year. The NOC warned that daily losses could exceed $ 26 million (118 million Libyan dinars).
“It is worth mentioning that the funds received so far are less than 2% of NOC’s and its companies’ need to achieve the targets set for 2021,” says NOC.
The lack of funds has led to deterioration and pollution of storage tanks and transport pipelines and the stoppage of certain producing wells. Oil and gas containers have also been negatively affected, read the NOC statement.
NOC warned that other national oil companies may need to shut down production soon for the same reason.
Libya has been plagued by chaos since a NATO-backed uprising overthrew dictator Moammar Gadhafi in 2011 and divided the oil-rich North African country between a UN-backed government in the capital Tripoli and rival authorities based in the country’s east. Each side was supported by armed groups and foreign governments.
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