Funding lapses blamed for Libyan output woes

Libya’s reconstituted government is receiving blame for failure of oil production to recover from a slump caused by civil war and for the related loss of income.

The Petroleum Facilities Guard said it will close Gulf and Al Wafa oil fields in southern Libya because it hasn’t been paid for security services, Reuters reported.

The group earlier reached an agreement with the Presidency Council to open the Ras Lanuf, Es Sidra, and Zuetina terminals, but Reuters said the facilities remain closed (OGJ Online, Aug. 1, 2016).

The security force had claimed to be blockading the terminals to resist corruption and illicit oil sales. As part of the agreement to reopen the ports, it was to receive funds said to be overdue salary payments.

Libyan oil production has fallen below 400,000 b/d. Before civil war began in 2010, it was 1.6 million b/d.

National Oil Corp. Chairman Mustafa Sanalla said funding shortfalls by the Presidency Council, formed at the end of last year with support from the United Nations, was damaging Libyan oil fields.

“The Financial Arrangements Committee of the Presidency Council needs to explain the delay because every day our country loses over $10 million because of the shortfall, and that is money we will never recover,” he said in a statement.

According to Sanalla, NOC budget shortfalls have cut production in fields operated by subsidiaries Sirte Oil Co. and Arab Gulf Oil Co. by 229,000 b/d.

“Systemic underinvestment, combined with the blockades on our major oil fields, is going to impose enormous costs on the oil sector in future to recover lost capacity,” he said. “Because of changes in the reservoirs, some oil is going to be lost to us forever. We have a very long to-do list once stability is restored.”

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