9 October 2024: NOC lifts force majeure following CBL deal
This week we look at the end of the oil blockade, as well as Naji Essa formally taking control of the CBL, the HoR reducing the Forex tax, and the G7 meeting around migration.
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NOC lifts force majeure and oil production resumes following CBL deal; NOC and GNU have PR push around increasing production and attracting investment
Incident: After 5 weeks of closure, and nearly 2 months for Sharara, operations resumed this week at all of Libya’s oil fields and ports following the agreement on the Central Bank of Libya (CBL) governorship.
On 3 October, the National Oil Corporation (NOC) announced the formal lifting of force majeure on all Libyan crude oil fields and ports.
The UN Support Mission in Libya (UNSMIL) welcomed the lifting of force majeure and emphasised that it is essential that revenues from this ‘vital resource’ be channeled ‘through the appropriate institutional framework’, and ultimately to the CBL.
On 8 October, the NOC said that Libya’s production had reached 1.133 million bpd of crude oil and condensate in addition to 206,666 bpd of oil equivalent in gas.
However, there remain tensions within the sector, with the politicisation of the oil sector unlikely to abate anytime soon.
On 5 October, the NOC issued a statement rejecting claims that foreign forces are guarding ‘certain Libyan oil fields and installations’. Recalling that these facilities represent ‘a primary pillar’ of Libya’s economy, the NOC declared that they are guarded by Libyan national security and military forces. This statement followed rumours that Russian forces are securing certain fields in southern and central Libya.
In addition, on 6 October, the Supreme Council of Zintani Revolutionaries threatened to shut down the Riyayna pipeline valve (which would prevent oil from flowing from Sharara and al-Feel to Zawiyya and Mellitah ports) until a new unified government is formed to replace the Government of National Unity (GNU). This threat was renewed on 7 October during an emergency meeting of Zintani armed groups following the detention of Zintani military figure al-Ajami al-Atiri by the Internal Security Agency (ISA) led by Lufti al-Hariri.
There have been a flurry of high-level meetings between the NOC and key Libyan oil, economic and political actors focusing on reviving investment efforts and increasing production.
On 3 October, the NOC Chairman Farhat Bin Qadara met with the new CBL Governor Naji Issa. They discussed the CBL mechanisms to maintain financial sustainability and compensate for the revenue deficit resulting from recent closures and the decline in oil prices. On the same day, Bin Qadara met with Prime Minister Abdul Hameed Dabaiba, reportedly providing a comprehensive briefing to the PM on the steps taken by the NOC to raise production rates and relaunch the development of the sector’s infrastructure.
On 6 October, the NOC Board of Directors held a meeting specifically aimed at finalising preparations for the next public tender round. The NOC announced that this new round comes ‘within the Corporation’s plan that aims to increase production and allocate new areas for exploration’, stressing that a team of experts has already prepared a detailed study to this end.
Meanwhile, Bin Qadara has also held several meetings with international diplomats in the wake of the blockade being lifted.
Comment: The oil blockade began in early August with the interruption of activities at the Sharara field, the largest in Libya, located in the south and managed by the Spanish company Repsol; this was caused by a dispute between the Haftar family and Spain. Subsequently, in late August the blockade was extended to most of the oil fields due to the dispute between the rival administrations of the east and west of the country for control of the CBL. This caused Libyan oil production to fall to as low as 300,000 bpd, though production amounts fluctuated and were not clarified by the NOC or other Libyan authorities. The end of the blockade was due to the agreement reached on the top positions of the CBL and the appointment of the new Governor Naji Issa. Overall, the blockade is estimated to have resulted in the loss of around 1.4 billion US dollars.
During his meetings after the lifting of force majeure, Dabaiba stressed the importance of providing an appropriate investment environment for the return of foreign companies. He stressed the need to complete pending oil projects and develop the energy infrastructure, which would contribute to ‘increasing productivity and stabilising oil supplies’, and encouraged both these key figures in the sector to look for international collaborations and partnerships.
Significance: The blockade of Libya’s oil fields and ports has officially ended after a month-long standstill related to the CBL crisis. Shortly before the disruption, the NOC was pursuing several projects to increase the country’s oil production to 1.4 million bpd by the end of 2024, with the aim of reaching 2 million bpd during 2025. The NOC is now trying to revive some of these projects while trying to launch new ones – particularly with foreign partners – to meet its ambitious goals and to strengthen the narrative that Libya’s oil sector is open for business once more. However, oil companies will be very wary about committing to projects in Libya given the current economic, political and legislative instability.
The long-touted plans to hold a licensing round for exploration are likely to become more prominent in the coming period. However, there will be major concerns around how such contracting processes could be politicized (as has frequently happened in the past) as Libyan actors seek to use these contracts to secure influence and funds (especially if it becomes harder to do so via the CBL). There will also be concerns around whether such contracts will be honoured if the leadership of key institutions changes, or if there is a complete overhaul of the institutional landscape. As a result, the NOC’s plans to return to Qadhafi-era production levels are unlikely to be realized in a sustainable way anytime soon.
While on paper, the reopening of oil fields and the stabilisation of the economic sector could encourage political and military institutions to form a new, unified government, at this point it seems more likely that the battle for control over Libya’s oil wealth will only intensify in the short term. Although the CBL agreement should prevent a renewed LNA-led countrywide blockade on oil facilities in the short term, it could increase the risk of more localized shutdowns as actors seek to exploit any leverage they can over the currently febrile political situation. In short, the current CBL agreement is unlikely to end the struggle for control over Libya’s oil wealth in the short-to-medium term, with politicization and disruption likely to continue.
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New CBL Governor takes office in Tripoli but divisions remain as PC concerned over board appointment process and HoR reduces Forex tax to 20%
Incident: At the start of the week, the new Central Bank of Libya (CBL) governor officially took office in Tripoli, yet the Presidential Council (PC) had made it clear that it remains unhappy with many elements of the agreement, especially around the appointment of the CBL board.
On 2 October, PC head Muhammed al-Menfi received in Tripoli the new CBL Governor Naji Essa and Deputy Governor Marei al-Barassi, in the presence of the outgoing PC-appointed governor Abdul Fattah Abdul Ghaffar, and the GNU Minister of Transport and Chairman of the Handover Committee, Muhammed al-Shoubi. Menfi praised Abdul Ghaffar’s ‘national and historic’ role managing the CBL ‘under the most difficult circumstances, implementing judicial rulings and meeting the aspirations of the people in abolishing the tax on foreign currency.’ Menfi stressed that the CBL Governor must ensure the remit of the CBL remains technical, stays away from politics and does not exceed the legal powers of the Board of Directors.
Emad Trabelsi participates in the G7 MoI meeting in Italy on migration
Incident: From 3-4 October, the G7 interior minister meeting was held in Mirabella Eclano in Italy. Ministers of the ‘outreach countries’ Libya, Algeria, and Tunisia, as well as representatives of IOM and UNHCR’ were invited to attend Session 4 on ‘Migration Issues’ on 4 October.
The focused on human trafficking, with a geographical focus on West and Sub-Saharan Africa, and on the adoption of an Action Plan against human trafficking. European Commission Vice President Margaritis Schinas stressed that, on the issue of irregular migration, the EU ‘is encouraged by the results achieved so far on the Central Mediterranean route’. GNU MoI Emad Trabelsi emphasized in his statement that the migration phenomenon is a great burden on Libya, especially with regard to the negative economic, social and security impact the country is experiencing.
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New CBL Governor takes office in Tripoli but divisions remain as PC concerned over board appointment process and HoR reduces Forex tax to 20%
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