Libya’s National Oil Corporation (NOC) resumed its work in many fields and ports that had been submitted during several years to what had been known as “forced closure”. Therefore, many observers see the fact that those sectors and facilities are now back to work as something positive, especially since oil is the only income of the Libyan state. Problems surrounding oil had led to a deterioration of average economic and developmental conditions in Libya, especially since the population had never been used to going through austerity measures and experiencing cash shortage. Many reasons were behind this situation, starting with the political conflict that prevails in the country. To discuss these issues, Stractegia has interviewed Mustafa Sanallah, head of Libya’s National Oil Corporation.
Stractegia – How did you manage to relaunch the NOC’s activities, especially since the company was facing divisions at the internal administrative level similar to what we can see in other national institutions?
Mustafa Sanallah – Since the political conflict in Libya broke out in 2011, we moved as quickly as possible to establish contact between the parties in conflict; the goal was to understand the whole picture in case our company had to get involved in the conflict. We received many guarantees that the NOC’s neutrality would be respected, but as time passed, we noticed that some of the parties were not meeting their commitments. Therefore, we found ourselves forced to take matters in hand by favoring dialogue with both civil society representatives that have influence in the regions that are rich in oil and some of the political actors that have good relations with international organizations.
Stractegia – Estimates from last year suggested that oil production in Libya would exceed 1.7 millions barrels/day in 2018, but it looks now that this will hardly happen. Can you explain the reasons why?
MS – Indeed, those were our expectations and they were based on a pragmatic assessment of the evolution of the security situation in the country as well as on the promises that we had been given on this issue. We were less worried about having any technical problems since we have sufficient skills to address such issues. But the main problem is the political scene, and how it affected the security situation and led to a decrease in production.
Despite this situation, oil production in Libya remained at an average 1 million barrel/day and sometimes more, despite the presence of some technical problems that were dealt with quickly and in a professional manner, as was the case with the fire that occurred in Sidra. Before the fire, Sidra’s production was 120 thousand barrel/day, and despite the fact that production had to stop for a week due to this incident, today, Sidra delivers 170 thousand barrel/day in compensation for the lost days.
Besides the security conditions, there are additional obstacles such as the lack of investment in the oil sector, or the NOC’s liquidity shortage, all of which led to the reduction of the operations of maintenance and impeded the completion of some projects that would have otherwise contributed to the development and the enhancement of the oil sector’s production base.
Both the closing of some fields and ports due to political tensions as well as corruption resulted in company losses reaching a total of 126 billion dollars. This loss affected the oil sector as well as the economy of the country in general.
Stractegia – What would your reaction be if some of the political forces would use the excuse of oil production or of the country’s tribal sociology to try and pressure some actors by blackmailing them?
MS – Unfortunately, the example you use is closer to reality than what one would think. That said, some regional and international actors promised that they would side with the NOC if it had to face such situations, and this makes us very optimistic. I am saying that while we are also aware that some parties are not interested to abide by the politics of consensus; they prefer to blackmail with the intention of spreading their own political views.
Stractegia- What about the nature of your relationship with Fayez Sarraj and Khalifa Haftar?
MS – I have good relations with all the national organizations and personalities. All of them are aware that the National Oil Company is a legitimate and united entity that is based in Tripoli.
Stractegia – How did you deal with OPEC on the issue of reducing oil production as an efficient way to stabilize volatile oil prices?
MS – We regularly give OPEC and all the other competent organizations and bodies that are based inside and outside Libya relevant information related to oil production and the obstacles it faces. OPEC showed willingness to understand the special situation that prevails within the country; it even agreed to spare Libya some of the limits in oil production that are binding for the organization’s members. That said, OPEC also requested that Libya’s production not exceed the limit of 1.2 million barrel/day.
Stractegia – On what you just said, what about these allegations based on the existence of a “secret document” that suggests that OPEC forced Libya and Nigeria to reduce their oil production?
MS – There are two sorts of decisions that are related to the Libyan oil sector: technical decisions on the one hand, and political and economic decisions on the other hand. The NOC’s actions are conditioned by technical aspects; oil production and the way relations unfold with clients are based on this. At the same time, the “political entity” gives us instructions for what relates to our volume of production and the way we manage it.
This is why our first concern goes to everything that relates to technical issues, to how obstacles to production can be overcome, to how we can build new structures that will allow us to develop and/or improve the system. That said, we are not involved in decisions related to the volumes of exportation, since these depend on sovereign political decisions that we are not involved in.
In addition to that, all OPEC members are aware of the confusing situation that prevails in Libya, and they are informed of the country’s political and economic evolutions; we feel reassured by the nature of their discourse on the matter.
Stractegia – Back to the Sidra issue, Reuters said that armed men were responsible for bombing the pipeline at the end of 2017. To which extent is this true? And how are you going to deal with similar situations in the future?
MS – We established technical and security committees in order to investigate the reasons of this explosion; so far, these committees did not publish the results of their investigation, and what we know about the matter lacks accuracy for the time being. One of the reasons for that lies in the fact that the parties linked to this explosion have not expressed the real motivations for their actions yet. Now, if we managed to prove that the ones responsible for such deviant actions were some renegades, the NOC would therefore have considerable support to its action, including from civil society, which has always been on our side.
Stractegia – Finally, what can you tell us about the new Office of Marketing and Public Relations that the NOC just opened in the United States?
MS – This office works outside Libya, and specifically within the United States. The reason for this is simple: the biggest oil-related opportunities are in the United States. Our need to improve our oil sector that I mentioned before, as well as the high number of renowned oil experts and advisers that work in the United States and our need to find further opportunities for our production explain our interest for this country.
This interview has been conducted by Mohammed Sreit, a journalist and a Libya researcher at Stractegia.