Libya's National Oil Corporation has warned that the country's crude oil production could drop sharply over the next nine months if the government in Tripoli does not release funds already approved for disbursement to NOC.
Chinese Xinhua news agency quoted a statement by NOC's chairman Mustafa Sanalla that said, "If the corporation's allocations are not released without delay, Libyan oil production will be hundreds of thousands of barrels per day lower than it should be. That will have an extremely negative effect on national income."
Libya's oil industry has had more than its fair share of problems, from pipeline and field blockades and sabotages that have been causing production outages on a pretty regular basis to political trouble.
The latest in this respect was the formation of a parallel board of directors for a subsidiary of NOC, Brega Petroleum Marketing Company (BPMC), earlier this year.
BPMC, which is based in eastern Libya, has seen some board members break away and accuse parent company NOC of deliberately cutting jet fuel and kerosene supply to the eastern part of the country, controlled by eastern strongman General Khalifa Haftar.
At the time, NOC's Sanalla slammed the move as an attempt "to serve narrow interests and foreign agendas," and added "The real motive behind this attempt is to set up a new illegitimate entity for the illegal export of oil from Libya."
Despite these dire straits, NOC has big plans for the future. At the moment, the North African country's production is hovering around the 1-million-bpd mark, which is in itself an achievement given the difficult security situation and the constant risk of yet another field outage or pipeline blockade as we have seen in the past three years.
Even so, according to an IHS Markit analyst, Libya could boost its oil production to as much as 2 million bpd. NOC is already talking to foreign companies that might be willing to return to the country and invest in more production.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More