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The United States should step in and help lift the blockade of Libyan oil ports that has decimated the country’s oil production, the chairman of the National Oil Corporation, Mustafa Sanalla said during a meeting with the U.S. ambassador.
“US Ambassador Norland and I agreed that the oil and gas sector must be allowed to operate for the benefit of all Libyans, as it represents the only income for state. That means ending the blockade, which is doing severe damage to the economy of country,” Sanalla was quoted as saying by Libyan media.
“I am hopeful that the US will continue their efforts to broker peace so that Libya’s economy can slowly rebuild and work towards prosperity for all Libyan people. We urgently need US leadership to help end the oil embargo, not just to avoid a financial crisis, but to prevent major damage to national infrastructure,” Sanalla also said.
A group of tribal paramilitary organizations blockaded Libya’s oil ports in January as part of the ongoing offensive of the eastern government-affiliated Libyan national Army against the Government of National Accord based in Tripoli.
The blockade has led to a slump in oil production from over 1.2 million bpd to less than 200,000 bpd and a warning, earlier this month, from the Prime Minister of the GNA that if it continues, the country will face financial disaster.
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“The continuation of the shutdowns will result in a catastrophic financial crisis,” said Fayez Serraj. “Losses from the oil shutdowns have exceeded $1.4bn. The figure is increasing every day.”
Indeed, in late January, NOC’s Sanalla told Bloomberg that Libya could lose all of its oil production if the blockade was not lifted soon, and the latest production figures suggest that output may indeed be heading for zero, with no free storage space left to stock oil from still-producing fields.
The latest production update from NOC says that Libya is producing just 124,000 bpd because of the continued blockade. What’s more, an LNA attack on the port of Tripoli has prompted four vessels to leave the port to avoid getting hit by a missile after one narrowly missed an LNG carrier that was unloading its cargo at the time, Lloyd’s reported.
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.