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Libya Could Lose Oil Production if Fighting Continues

Libya’s oil production is under threat from renewed fighting between warring armed groups and the situation could become as bad as it was during the 2011 civil war, the National Oil Corporation’s chairman, Mustafa Sanalla, told the Financial Times in an interview.

“I am afraid the situation could be much worse than 2011 because of the size of forces now involved,” Sanalla told the FT, adding “Unless the problem is solved very quickly, I am afraid this will affect our operations, and soon we will not be able to produce oil or gas.” 

The flare-up of inter-group violence took many by surprise as it came after comments from the commander of the Libyan National Army, General Khalifa Haftar that soon Libya will have a single government. The LNA is affiliated with the eastern government that the UN has not recognized but some took the comments to mean negotiations are on the table.

Instead of negotiations, the LNA advanced on Tripoli. Since then, fighting has been intensifying with no end of the violence in sight.

Sanalla called on the international community to step in and put an end to the violence but options are limited amid the deep division between warring factions, all of which are seeking control over the country’s oil.

“The oil production must remain uninterrupted. If we lost 1.2m barrels a day of production at this time you cannot imagine what the global price would do,” Sanalla said in the interview. Libya depends on its oil and gas exports for more than 95 percent of its exports and the consequences of the conflict spreading to oil and gas fields will in all likelihood be disastrous for an economy still reeling from the fallout of a bloody civil war.

The EU, which recognizes the Government of National Accord based in Tripoli, yesterday issued an official statement urging the sides in the conflict to stop the violence. Their heeding the call remains doubtful.

By Irina Slav for Oilprice.com

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