NOC in West Libya Warns About `Illicit' Oil Sales From Eastby and
National Oil says buyers seek to load cargoes at Hariga port
Eastern NOC says 10 contracts signed to ship crude at port
National Oil Corp. in western Libya warned traders against loading “illicit” cargoes of oil at Hariga port in the eastern part of the country amid claims by a competing organization that it’s arranging such sales.
Six or seven foreign companies signed oil-purchase contracts from the port with people who “have no authority to sell Libyan oil,” the Tripoli-based NOC said in a statement, citing Ahmad Shawki, general manager for international marketing. It identified Loyd Capital and Netoil as among buyers attempting to load crude at Hariga. “The only authority legally empowered to sell Libyan crude oil is the National Oil Corporation, with its seat in Tripoli,” NOC said.
Libya, which holds Africa’s largest proven oil reserves, split into two administrations late in 2014, one in the west and an internationally recognized government in the east. It’s now in the process of setting up a Government of National Accord. The NOC in the west is recognized by traders such as Glencore Plc and Vitol Group as the official marketer of Libyan oil. It also claims United Nations recognition.
The eastern government set up a separate NOC administration and sent an official to OPEC meetings.
“Tripoli isn’t internationally recognized and so they don’t have the power to say who is and isn’t authorized to sell crude,” Loyd Capital Management LP Chief Executive Officer Edward Loyd said Friday in a phone interview. Loyd plans to send oil to refiners in two “western-leaning governments,” and three shipping companies have agreed to lift crude for Loyd on condition that it provides necessary documentation, he said.
Mustaffa Sanalla, chairman of the Tripoli NOC, said his organization is the one with UN recognition and potential buyers can get the situation clarified by their own governments’ Foreign Offices if in doubt. He cited two UN resolutions.
One of those was resolution 2259, in December, which called for support to “parallel institutions” to halt in order to preserve the integrity of the National Oil Corp. and other government institutions. That amounts to support for the Western NOC, according to Sanalla. Libya is in the process of forming a Government of National Accord.
The letter from NOC in Tripoli advised shipowners to “verify whether charterers’ contracts are legitimate, or run the risk of having their ships impounded.”
Libya produced about 1.6 million barrels a day of crude before the 2011 rebellion that ended Moammar Al Qaddafi’s 42-year rule. It’s now the smallest producer in the Organization of Petroleum Exporting Countries, pumping 370,000 barrels a day, data compiled by Bloomberg show. Since Qaddafi’s ouster and death, various armed militias are also competing for control of oil facilities.
The eastern group signed 10 contracts, with exports to start in two weeks from Hariga, said Nagi Elmagrabi, the organization’s chairman.
Netoil “always follows commercial opportunities within the boundaries of the law,” the company said in an e-mailed statement on Friday. Eastern Libya “is under the control of the legitimate government in Tobruk,” it said. “We therefore shall not experience any issues with the continuity of the flow of supply and the exporting of the oil.”