Sanalla condemns lack of funding for Libya’s oil sector

Libya

Published on Monday, 24 January 2022 Back to articles

National Oil Corporation’s chairman Mustafa Sanalla

The National Oil Corporation’s (NOC) chairman Mustafa Sanalla held a press conference in Tripoli where he once again condemned the lack of state funding for the oil and gas sector. He claimed that last year the corporation only received 11% of the funds that had been allocated to it. He added that, as a result of receiving little or none of the state budget in recent years, the NOC’s accrued debts had reached almost LD3 billion (US$650 million) by the beginning of 2021 but, despite this and the major security problems, had managed to achieve high production levels nonetheless.

Sanalla said that the corporation would try to maintain production of 1.2 million b/d. If the NOC’s  expected  budget of LD31 billion (US$6,774 million) is forthcoming this would allow two new fields to come onstream and increase total production to 1.45 million b/d by the end of this year. With political tensions still as high as ever it is possible that the sector is facing another year without the necessary funds. Despite this, however, the NOC has demonstrated its ability to carry out essential repairs quickly and maintain production despite regular political flare-ups which suggests that it may be able to continue at current output levels even if it is unable to increase it.

There is the possibility, however, that militias linked to Khalifa Haftar’s Libyan Arab Armed Forces (LAAF) could renew their previous blockade of the main oil fields and export terminals in the Oil Crescent and eastern Libya because of delayed payments from Tripoli. The Es-Sider, Ras Lanuf, Brega, Zueitina, and Hariga export terminals are considered particularly vulnerable after the LAAF falsely told its fighters that the Government of National Unity (GNU) had suspended salary payments. In fact the money has been allocated but the LAAF has refused to provide verifiable information about the true number of men which means that it is likely to inflate the numbers in order to obtain salaries for ‘ghost’ fighters.  

This comes after: blockades by members of the local Petroleum Facility Guards (PFG) in the southwest’s Murzuq Basin; temporary bad weather during recent weeks; and the closure of a major pipeline for maintenance (Libya Politics & Security – 17.01.22). On the other hand, given that the delayed elections appear to be at least six months away, some commentators believe that production will remain at the current level with new economically damaging shutdowns unlikely.

This excerpt is taken from Libya Politics & Security, our weekly intelligence report on Libya. Click here to receive a free sample copy.

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