Libya's NOC Confident It Can Keep East From Exporting Oil

(Bloomberg) -- The chairman of Libya’s National Oil Corp. in Tripoli said he’s confident that the U.S. and other world powers would help block authorities in eastern Libya from exporting any crude after militia captured key ports there.

Forces loyal to Khalifa Haftar, a commander in the politically divided nation’s east, have handed over control of ports with a combined export capacity of 800,000 barrels a day to a self-declared NOC in the eastern city of Benghazi. The U.S., U.K., France and Italy expressed concern about the transfer to “an entity other than the legitimate National Oil Corporation,” the countries said in a joint statement.

“We are confident the international legal regime will hold and NOC East will not be able to export,” Mustafa Sanalla said in a phone interview. “Only NOC can sell Libyan oil on global markets,” and support from international powers including the U.S. “underscores our position,” he said.

“Companies entering into illegal contracts with parallel institutions will be pursued by all legal options, including UN sanctions,” Sanalla said.

Libya holds Africa’s largest crude reserves, but seven years of conflict among armed groups competing for influence over its energy riches have hobbled production and exports. Recent clashes cost the country about 450,000 barrels of daily output, taking more oil off the market just days after the Organization of Petroleum Exporting Countries reached a deal with allied suppliers to increase production.

Benchmark Brent crude gained 1.4 percent to trade at $78.35 a barrel at 3:38 p.m. in London.

Sanalla urged Haftar’s forces to “come to their senses and return operational control” of the ports and oil fields to the Tripoli-based NOC. The transfers of control of eastern oil facilities to the parallel NOC in Benghazi “only harm the long-term prospects of the Libyan oil sector, reducing investor and partner confidence,” Sanalla said.

He made his remarks hours before the start of the “1st Libyan-European Oil & Gas Summit” in Vienna. The NOC in Tripoli remains committed to its customers despite major challenges, Sanalla told the conference by video.

Libya’s oil exports and facilities must remain “under the exclusive control” of the Tripoli NOC, the European Union said Thursday in a statement. The EU would “continue to counter any attempt to trade Libyan oil outside the internationally recognized official channels,” it said.

Five Ports

The breakaway NOC based in Benghazi ordered a halt in previously arranged oil exports from five eastern ports, according to the company’s head, Faraj Saeed. Any tankers trying to enter the ports -- Es Sider, Libya’s largest oil terminal, as well as Ras Lanuf, Zueitina, Brega and Hariga -- will be considered illegal, he said Thursday by phone.

Saeed didn’t say if or when his Benghazi-based company would try to export from the eastern ports independently of the NOC in Tripoli.

Libya currently pumps 700,000 barrels a day, Sanalla said. The recent fighting that halted crude loadings in the North African country’s Gulf of Sirte region resulted in lost oil and natural gas production valued at more than $460 million, with each additional day costing $33 million, he said.

To contact the reporter on this story: Salma El Wardany in Cairo at selwardany@bloomberg.net

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Bruce Stanley, Rakteem Katakey

©2018 Bloomberg L.P.