Libya: the national oil company gets (finally) a breath of financial oxygen

Following a recent statement by the Libyan national oil company, which warned that the country’s production « could drop sharply over the next nine months if the government continues to block already approved budgets », the Libyan authorities confirmed on Saturday 5 October that they had allocated 1.5 billion Libyan dinars ($1.06 billion) to the NOC to maintain oil production in 2019-2020.

According to Reuters, quoting a government document sent to its teams, the equivalent of $850 million will be spent on « projects that help maintain current production rates and increase the production capacity of the oil and gas sector ». The remainder, just over $200 million, is expected to be used to settle the NOC’s financial commitments to other companies. The official note also indicates that the allocated money will be deposited in a so-called « emergency » account, which the company will be able to access if necessary. The source of funds will be provided by royalties on foreign currency transactions, in effect since 2018. This is saving news for the public company, which was complaining more and more about its lack of resources. In a statement dated 2 October, NOC President Mustafa Sanalla warned that « if the company’s allocations are not released without delay, Libyan oil production will be several hundred thousand barrels a day less than it should be », which would have « an extremely negative effect on national income ».

Location of oil fields in Libya

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The company, split between the government of Tripoli – recognized by the international community – and Marshal Haftar’s camp, currently produces about 1.3 million barrels/day. This is well below the levels recorded before the fall of President Muamar Gaddafi in 2011 (1.7 million barrels/day). Since then, state disorganization, fighting between rival factions and attacks on oil sites have thwarted national production.