Libya state oil co. confident eastern rival can't ship crude

Tripoli's internationally recognised central bank is accused of using oil money to fund foreign militias fighting in the country's east.

The chairman of Libya’s National Oil Corp. in Tripoli said he’s confident that the U.S. and other world powers would help block authorities in eastern Libya from exporting any crude after the Libyan National Army captured key ports there.

Forces loyal to Col Khalifa Haftar, a commander in the politically divided nation’s east, have handed over control of ports with a combined export capacity of 800,000 barrels a day to a rival NOC in the eastern city of Benghazi. The U.S., U.K., France and Italy expressed concern about the transfer to “an entity other than the legitimate National Oil Corporation,” the countries said in a joint statement. Col Hafta's forces have expressed concern at reports the Tripoli Central Bank, where payments for international oil purchases are deposited, is funding foreign militias that are fighting his eastern Libyan group.

FILE PHOTO: Khalifa Haftar, the military commander who dominates eastern Libya, arrives to attend an international conference on Libya at the Elysee Palace in Paris, France, May 29, 2018.  REUTERS/Philippe Wojazer/File Photo

“We are confident the international legal regime will hold and NOC East will not be able to export,” Mustafa Sanalla said in a phone interview. “Only NOC can sell Libyan oil on global markets,” and support from international powers including the U.S. “underscores our position,” he said.

“Companies entering into illegal contracts with parallel institutions will be pursued by all legal options, including UN sanctions,” Sanalla said.

Libya holds Africa’s largest crude reserves, but seven years of conflict among armed groups competing for influence over its energy riches have hobbled production and exports. Recent clashes cost the country about 450,000 barrels of daily output, taking more oil off the market just days after the Organization of Petroleum Exporting Countries reached a deal with allied suppliers to increase production.

Sanalla urged Haftar’s forces to “come to their senses and return operational control” of the ports and oil fields to the Tripoli-based NOC. The transfers of control of eastern oil facilities to the rival company in Benghazi “only harm the long-term prospects of the Libyan oil sector, reducing investor and partner confidence,” Sanalla said.

He made his remarks hours before the start of the “1st Libyan-European Oil & Gas Summit” in Vienna. The NOC in Tripoli remains committed to its customers despite major challenges, Sanalla told the conference by video.

Libya’s oil exports and facilities must remain “under the exclusive control” of the Tripoli NOC, the European Union said Thursday in a statement. The EU would “continue to counter any attempt to trade Libyan oil outside the internationally recognized official channels,” it said.

The breakaway NOC based in Benghazi ordered a halt in previously arranged oil exports from five eastern ports, according to the company’s head, Faraj Saeed. Any tankers trying to enter the ports - Es Sider, Libya’s largest oil terminal, as well as Ras Lanuf, Zueitina, Brega and Hariga - will be considered illegal, he said on Thursday by phone.

A member of the Libyan National Army flashes a victory sign next to a burning tank after clashes to recover oil ports in Ras Lanuf, Libya June 21, 2018. Picture taken June 21, 2018. REUTERS/Stringer.  NO RESALES. NO ARCHIVE

Saeed didn’t say if or when his Benghazi-based company would try to export from the eastern ports independently of the NOC in Tripoli.

Libya currently pumps 700,000 barrels a day, Sanalla said. The recent fighting that halted crude loadings in Libya’s Gulf of Sirte region resulted in lost oil and natural gas production valued at more than $460 million, with each additional day costing $33 million, he said.