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(Bloomberg) – The longtime head of Libya’s state-owned oil company will remain in office, Prime Minister Abdul Hamid Dbeibah said in an executive order, seeking to end a feud between two key oil officials and bolster stability OPEC’s financial lifeline for the nation.
Dbeibah’s Sept. 14 decree, which was seen by Bloomberg, effectively overturns an earlier decision by the Minister of Oil, who sought to suspend National Oil Corp. Chairman Mustafa Sanalla.
Oil Minister Mohamed Oun’s decision in August was based on a claim that Sanalla had traveled abroad without permission – a “violation” of ministry policy. But the move had been widely seen as yet another example of Libya’s convoluted policies and a struggle between rival institutions that risked causing a collapse in the OPEC member’s crude production.
Sanalla, who has held his post since 2014, has sought to keep the NOC out of the political fray that has emerged amid a conflict between rival governments in the east and the west. The head of the NOC is seen as someone who has effectively run the oil industry for years, including signing deals with international companies and representing Libya at meetings of the Organization of the Petroleum Exporting Countries.
Libyan oil production threatened again due to political power struggle
While an agreement negotiated by the United Nations led to the establishment of a unity government, this cohesion has not yet filtered through to the various state institutions. It tests efforts to rebuild a nation beset by conflict since the 2011 ouster and murder of longtime leader Muammar Gaddafi.
Oun, who took office in March with the reestablishment of the ministry, wants the NOC’s board to be changed and Sanalla to be removed, a move Dbeibah has resisted. The formation of the Petroleum Ministry created an administrative overlap with the NOC, leading to ambiguity as to who is best equipped to run the vital sector.
The relative political stability in recent months has resulted in production hovering around 1.2 million barrels per day.
Protesters, however, recently briefly halted oil exports from three key terminals in the east, while others have also threatened to shut down production in fields such as Sharara, the country’s largest. It shows how easily the situation in Libya can change.
Ensuring a stable oil flow is essential for Libya’s political reconciliation and economic reconstruction efforts. Revenues from crude oil sales are the country’s main source of foreign income. The disruption of these cash flows could undermine political stability, including the much-anticipated election in December.
(Redesigns and updates throughout.)
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