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Why Oil Prices Can’t Gain Traction

Why Oil Prices Can’t Gain Traction

Despite a significant drop in…

Libya’s NOC Rejects Government Decree Seeking Control over Oil

Libya Oil

Libya’s National Oil Corporation has lashed out against the Government of National Accord, which issued a decree effectively giving it more control over the country’s oil wealth this weekend .

The GNA said in the decree that it will now supervise investments in Libya’s oil sector and will have the power to approve and cancel contracts. This sparked outrage in NOC, which has been the single handler of the country’s oil wealth since it disintegrated into chaos after the toppling of Muammar Gadaffi, and is now unwilling to let go.

NOC’s chairman Mustafa Sanalla said that the GNA had no authority to introduce such changes. “It has exceeded its authority. Only the House of Representatives (HOR), the legislature, has the power to make these changes.” There is a problem with this, however; the GNA is at odds with the Tobruk-based HoR, which has not yet approved its lineup of ministers. In fact, the HoR is widely seen as a parallel government in Libya.

Although NOC granted the GNA – formed with heavy involvement from the UN – it seems things are beginning to go downhill. This is not good news for the UN-backed government, which has  failed to settle its differences with the eastern factions aligned with the HoR and restore order in the war-torn country.

Related: The Upcoming Surge In U.S. Oil Demand Explained In One Chart

Libya’s oil industry has been recovering, making control of its only abundant natural resource all the more coveted. To date, daily production is 700,000 barrels, with NOC planning to bring this to 1.1 million bpd by the end of the year. Before the civil war, Libya was producing 1.6 million bpd.

For two years, until last September, production was more or less clinically dead, as the Petroleum Facilities Guard occupied the export terminals located in the so-called Oil Crescent, refusing to let any shipments go. In September, an eastern faction, the LNA, wrested control from the PFG and handed it over to NOC, which immediately restarted exports.

By Irina Slav for Oilprice.com

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