Libya's internationally recognized National Oil Corporation (NOC) said on Thursday that it is concerned about an increased military presence inside one of the country's key oil terminals, Ras Lanuf, warning that the facility could become a military target, putting at risk its critical oil infrastructure.
NOC's warning is the latest sign that the ongoing fighting among forces loyal to the Tripoli-based UN-recognized government and a self-styled army of a military commander from the east could spill over to Libya's oil sector and infrastructure, potentially leading to an oil supply outage from the North African OPEC member which pumps just over 1 million bpd at present.
While the oil market is fixated on the U.S.-China trade war for signs of demand, and on Iran, Venezuela, and the Middle East for signs of more supply disruptions, investors have not fully priced in the increased risk that Libya's fighting could result in a serious oil supply outage, analysts say.
The security situation in Libya has materially worsened after eastern strongman General Khalifa Haftar ordered in early April his Libyan National Army (LNA) to march on the capital Tripoli. The self-styled army has been clashing with troops of the UN-backed government in a renewed confrontation that could escalate and threaten to disrupt, once again, Libya's oil production and exports.
According to NOC's press statement from Thursday, a group of around 80 military personnel under the command of Major General Abdullah Nur al-Din al-Hamali from LNA entered the port on June 5, commandeering one building and converting it to military use.
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"We cannot accept a situation where any party to the current conflict misuses oil facilities," NOC chairman Mustafa Sanalla said.
"The presence of forces inside the terminal represents an unacceptable risk to employees. This renders the terminal a potential military target, thereby risking the destruction of Libyan oil infrastructure - and the resulting economic crisis that would follow," he said, adding that if risk assessments show that continued military presence is a risk to employees, NOC will take steps to protect them, including by withdrawing them from the oil terminal.
A spokesman for the LNA, however, denied that LNA forces are in the oil terminal's facilities. "We expect every day a lie about the army (LNA)," the spokesman told Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More