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New Player In Libya Threatens To Cut Off Oil Supply To Export Terminals

Libya

A new group calling itself the Supreme Council for Oil, Gas and Water Resources in the Oases and the Basin has threatened to block the flow of crude oil from fields in eastern Libya to the oil export terminals, also in eastern Libya, since all the revenues are going to the central bank in Tripoli, in the west.

The group has declared its support for the Tobruk-based House of Representatives, which has not recognized the UN-backed Government of National Accord, and the Libyan National Army, also HoR-affiliated, which controls the four export terminals.

The Supreme Council considers the Libyan Presidential Council headed by GNA Prime Minister Fayez al-Sarraj and presiding over the government unconstitutional and opposes the fact that revenues from oil extracted from the eastern fields are flowing to the Presidential Council.

It holds particular resentment towards a deal between the National Oil Corporation and commodity trading giant Glencore, under which the Swiss company will be able to market 230,000 bpd from two eastern fields, Sarir and Messla.

The two fields together produce a bit above 170,000 bpd at the moment, accounting for more than 25 percent of Libya’s 700,000-bpd daily. Because of their substantial contribution, any suspension of production at any one of them would have dire consequences for NOC’s revenues.

Related: Obliterating ISIS May Hamper Iraqi Oil Production

However, one ex-member of the GNA-affiliated Petroleum Facilities Guard that had the export terminals blocked for two years, crippling production, said that the Supreme Council for Oil, Gas and Water Resources is harmless. The person told the Libya Herald that although the group represented the population of several towns in the Oil Crescent, it had no support among communities in the south, where fields are controlled by various armed groups, so blocking any pipelines would be a difficult job.

Should the group cause a disruption in supplies, it will affect international pries, just like another recent pipeline block did, causing benchmark prices to jump as it took out 250,000 bpd off Libya’s output for a couple of days.

By Irina Slav for Oilprice.com

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