Libya Oil Chiefs Unify State Producer to End Row on Exports

  • National Oil Corp. leaders reach deal on unified budget
  • NOC to be headed by Mustafa Sanalla, based in Benghazi

Rival leaders of Libya’s National Oil Corp. reached an agreement to unify the state company under a single management, a step that could help end the conflict over who can control the divided country’s crude exports and revenue.

Mustafa Sanalla, the head of the NOC in Tripoli in the west of the country, will become chairman of the unified company, which will be based in Benghazi in the east, according to a statement on the NOC website. Sanalla’s eastern Libya counterpart, Nagi Elmagrabi, will join the NOC board. The agreement was reached Saturday in Ankara, Elmagrabi said in a telephone interview from the Turkish capital.

Libya, with Africa’s largest proven crude reserves, split into separately governed regions in 2014, leading to the establishment of rival NOC administrations. Libyan factions are currently working to set up a Government of National Accord. In the five years since the ouster of the country’s longtime ruler, Moammar Al Qaddafi, Libya’s oil installations have been attacked and its crude output has slumped.

“We made a strategic choice to put our divisions behind us and to unify and integrate NOC,” Sanalla said in the statement. “This agreement will send a very strong signal to the Libyan people and to the international community that the Presidency Council is able to deliver consensus and reconciliation. I’m sure it will now build on this success to bring unity and stability to other government institutions.”

Unified Budget

The two sides agreed on a unified budget for the remainder of the current financial year, and “took steps to address any imbalances resulting from the period of division,” according to the statement. NOC’s oil revenue will be evenly divided between the rival central banks in the east and the west of the country, Elmagrabi said by phone.

“The agreement is still pending the approval of the two parliaments of Tubruk and Tripoli,” respectively in the east and the west of the country, Elmagrabi said on Sunday.

The unified NOC recognizes the presidency council in Tripoli as the highest executive body and the parliament in the east as the legislative authority, the company said in a statement Sunday. Company officials have reviewed the budgets of both NOC administrations and agreed on a joint spending plan for the rest of the financial year, it said.

The reunification of the state oil company comes after Libya’s Petroleum Facilities Guard captured towns from Islamic State militants last month. It also comes after a previous agreement between the NOC competing administrations that allowed crude exports to resume from the port of Hariga in the east in May, easing a bottleneck and allowing for crude production to increase slightly to about 350,000 barrels a day.

Authorities in the east tried and failed in April to sell crude independently. A tanker was forced to return with its cargo after Malta’s government refused to let the vessel dock and the UN added the shipment to its sanctions list. While Libya’s eastern region holds large crude deposits, traders such as Glencore Plc and Vitol Group have recognized the NOC leadership in Tripoli in the west as the nation’s official crude marketer.

Libya’s crude production was about 1.6 million barrels a day before Qaddafi was ousted from power in 2011. It’s now the second smallest producer in the Organization of Petroleum Exporting Countries, as some of its oil fields and export terminals remain shut.

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