Libyan government in Tobruk will punish oil companies working with Tripoli

Malta conference hosted by eastern NOC warns oil firms that Tobruk will take oil companies dealing with Tripoli to arbitration

Security of supply for oil firms in Libya is a major concern for businesses
Security of supply for oil firms in Libya is a major concern for businesses

The internationally recognised Libyan government sent a strong message to oil companies seeking oil contracts, saying it would take companies who refuse to deal with Tobruk’s National Oil Corporation for arbitration.

Originally scheduled for September 2, the eastern NOC’s chairman Azzaldain Aboughalia hosted the conference at the Hilton hotel after moving it from Dubai because of difficulties experienced by the NOC and several of its clients in obtaining visas for the Emirates.

The meeting was conspicuous by the absence of Tobruk’s prime minster Abdullah Al-Thinni, who was banned by gunmen from travelling to Malta on Tuesday. He was stopped at Labrag Airport in Bayda when pro Khalifa Haftar militias prevented him.

Maghreb Confidential had reported that numerous oil companies had been reluctant to take part in the event, considering that their participation could be taken badly by the Tripoli NOC, with which many of them continue to work, given that it controls the bulk of Libyan oil production.

But in a stark warning to companies, Tobruk said it would shut down facilities not falling under its control, and only give priority to companies dealing with the eastern NOC and take those dealing with the Tripoli NOC for arbitration.

Tobruk is trying to lure foreign contractors to deal with the Al Thinni government and divert revenues to the east, even though it comes with a very undiplomatic warning.

NOC chairman Azzaldain Aboughalia said the country plans to boost crude output to 2 million barrels a day by 2020. “We will send letters to all the international companies that operate in Libya asking them to deal with the internationally recognized and legal government. We will take measures based on their respective replies to the letter. If they continue to decline to cooperate with the legal government, we will stop their loadings once their contracts expire.”

Libyan Central Bank governor Ali Hebri reassured companies that Tobruk would guarantee all supply agreements and payments. “Investment in Libya at the moment is ‘impossible’ but we have a high-profile research team that has mapped out our long-term needs. We will have to increase capacity to 3 million barrels per day for Libya to have the money to be able to diversify its economy,” Hebri said.

The NOC controls the Sirte, Merzuq, and Ghadamas basins, controlling a supply of some 1.25 million barrels per day – accounting for 97% of the Libyans’ exports.