The Levant News — Libyan recognize Government has tightened their grip over oil firms which are supplying oil to rivals, each and every oil firm currently active in Libya will have to register at National oil Corp. and the Libyan Government will ensure that oil isn’t being black marketed. This plan will help Libyan Government to increase oil production five fold besides making it hard for the rival cabinet to control the opposite end. The NOC will refuse to renew the contracts of any companies that don’t support the elected government, NOC Chairman Nagi Elmagrabi said in an interview in Valletta. The country plans to boost crude output to 2 million barrels a day by 2020, he said.
“We will send letters to all the international companies that operate in Libya asking them to deal with the internationally recognized and legal government,” Elmagrabi said. “We will take measures based on their respective replies to the letter. If they continue to decline to cooperate with the legal government, we will stop their loadings once their contracts expire.”
Tribal and political disputes have almost completely halted onshore crude output in the western region, where a government backed by moderate Islamist militias has held power since last year. The nation’s elected government is based in the east, where some oil continues to be exported. Libya, with Africa’s biggest oil reserves, pumped about 1.6 million barrels a day of crude before the 2011 rebellion that ended Moammar Gadhafi’s 42-year rule. It’s now the smallest producer in OPEC, producing 355,000 barrels a day in August, data compiled by Bloomberg show.
Like Libya’s political leadership, the NOC has competing eastern and western administrations that are trying to control energy facilities and fields. The NOC’s eastern-based management is seeking to lift force majeure at oil ports in that region, Elmagrabi said in a speech, without giving dates for such a step. Force majeure, a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control, was declared at the ports of Es Sidra and Ras Lanuf in December after they came under attacks.
The elected government is taking measures to secure its revenue from oil sales. The government opened an account last month at the Arab International Bank in Cairo where it can receive payments in foreign currency, Ali Hebri, the eastern-based central bank governor, said in an interview. Authorities can transfer money from this account to the central bank in the city of Al-Bayda, the eastern government’s seat of power, he said.
The central bank sees crude prices, which tumbled by about 50 percent last year, dropping below $40 a barrel, Hebri said. Brent crude, a global benchmark, was trading at $48.44 a barrel at 12:05 p.m. in London.
The price slide, along with Libya’s turmoil, is discouraging foreign investors and the country will need at least two years to attract the investment it needs to increase output beyond 1.6 million barrels a day, Hebri said.
Companies that support the internationally recognized government will be rewarded and given priority in future energy contracts, Mahdi Khalifa, an NOC board member, said at a news conference in Valletta. Any oil companies that refuse to cooperate with the government face the risk of legal action, he said. “We will give them time to review their position, and then we will take them to arbitration,” Khalifa said.
About 30 foreign companies signed up to attend the conference in Valletta, though officials declined to identify them. Other companies buying oil from the NOC’s rival management in Tripoli stayed away, Elmagrabi, the eastern-based NOC chairman, told reporters Tuesday.
“This philosophy of ‘you’re either with us or with them’ is not going to work,” said Edward Loyd, chief executive officer of Loyd Capital Management LP, an oil-industry investment with headquarters in Newport Beach, California.
“There is no harm in registering with the government that is recognized by the U.S. government, but the U.S. majors that stayed away from this event and that continue to deal with Tripoli are not willing to rock the boat and change how they operate in Libya if there is no agreement by the two sides.”
United Nations-sponsored talks held in Morocco to form a united government hit a snag when the internationally recognized government said Tuesday it had recalled its team after their rivals insisted on re-opening and adjusting the text of the agreement. The two sides can’t agree on the composition of a presidential council and won’t reach a consensus before next week on forming a unity government, said Elbadri, the deputy prime minister.
“There will be an agreement, not on Sept. 20, but there will be one,” he said in an interview.
Should the competing sides restore peace to the country, Loyd, the U.S. oil investor, said he would “absolutely” be willing to invest there. “Libya has a sweet crude that’s needed,” he said.