Libyan Forces Hand Oil Ports to East-Based Energy Company

TRIPOLI (Capital Markets in Africa) – Forces of Libyan Commander Khalifa Haftar handed control of oil ports in the east of the divided nation to a state unit rivaling the internationally recognized National Oil Corp. based in the capital Tripoli, in a surprise move that could create uncertainty among buyers.

“All oil facilities, all oil ports — not just the ones in the oil crescent but even Hariga port — all oil sectors, oil pipelines, all facilities will be handed over to the National Oil Corp. in Benghazi,” in the east of the country, General Ahmed al-Mesmari, a spokesman for Haftar forces, said on Monday in a televised press conference.

Mustafa Sanalla, chairman of the NOC based in Tripoli, in the west, said Haftar’s army has no legal authority that allows it to control oil exports in the country, and that any attempt to do that is a clear deviation from United Nations Security Council resolutions and Libyan law.

Libya, with Africa’s largest crude reserves, lost about 400,000 barrels of daily oil production due to recent clashes, taking more barrels off the market just as OPEC decided to boost production. The handover of the facilities to the Benghazi authorities may further hurt Libya’s oil production. It can also shake the confidence of buyers who have been dealing with the Tripoli-based NOC as the only legitimate entity that runs the country’s main source of revenue.

Oil Exports
“There is only one legitimate NOC, recognized by the international community and OPEC,” the chairman of the Tripoli-based state company said in the statement. “Exports by parallel institutions are illegal and will fail as they have failed in the past. NOC warns companies against entering into contracts to buy oil from parallel institutions. They will not be honored and NOC will pursue legal action against them by all options available.”

After weeks of heavy fighting, Haftar’s forces seized areas previously captured by a rival militia. Haftar’s spokesman said no tanker will be allowed to dock at Libyan ports without the permission of Faraj Al-Hassi, the head of the NOC in Benghazi. Attempts to sell crude by the Benghazi authorities have in the past failed because they couldn’t find buyers.

“This is a disaster for Libya and probably for the recent peace efforts. It is hard to see how it can succeed – the international community has already rebuffed eastern efforts to sell oil independently of Tripoli,” Derek Brower, managing director of research at Petroleum Policy Intelligence, a U.K.-based consulting company.

Libya has pumped 990,000 barrels a day over the past three months, well below the 1.8 million it produced before an uprising that ousted former leader Moammar Al Qaddafi in 2011.

Brent crude, the global benchmark, added 0.07 percent to trade at $74.78 a barrel as of 10:03 a.m. Dubai time on Tuesday.

Source: Bloomberg Business News