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Libya losing $60 million a day in oil shutdown: minister

·3-min read
Libya's Brega oil facility, pictured in 2020, is among those shut down (AFP/-) (-)

Libya is losing tens of millions of dollars a day from the shutdown of its oil facilities, while global prices are at their highest in years, the country's oil minister told AFP.

Oil is the lifeblood of the North African country trying to move past a decade of conflict since the fall of dictator Moamer Kadhafi in a 2011 NATO-backed uprising.

But since mid-April, Libya's two major export terminals and several oil fields have been held hostage to the country's latest political schism.

"Production has fallen by about 600,000 barrels a day," half the prior level, Oil and Gas Minister Mohammed Aoun said in an interview with AFP at his office in Tripoli.

"Calculating the sale price at $100 a barrel, losses are at least $60 million daily," he said.

Since Russia began its invasion of Ukraine in February, triggering Western sanctions, global crude prices have reached levels unseen since 2014.

On Friday the US benchmark West Texas Intermediate crude traded above $106 per barrel. The price of Brent crude exceeded $109 a barrel.

The Libyan closures follow the selection in February of a new prime minister, Fathi Bashagha, by Libya's eastern-based parliament in a direct challenge to Tripoli-based interim Prime Minister Abdulhamid Dbeibah.

- 'Loss of confidence'-

Analysts say eastern Libyan forces who back Bashagha have forced the closure of the oil facilities in a bid to press Dbeibah to step down, but the incumbent insists he will only hand power to an elected successor.

The political bloc supporting Bashagha is aligned with Libya's eastern-based strongman Khalifa Haftar, who in 2019-20 led a failed offensive against Tripoli, when his forces also blockaded oilfields.

Haftar's external backers include Russia, which belongs to the OPEC+ crude producers' group.

"The closures affect the petroleum infrastructure, especially the pipelines, harming Libya's reputation and leading to a loss of confidence on the international market," said Aoun, whose position did not exist until Dbeibah's appointment in 2021.

"When you deliver a given quantity to a customer and the next day you can't, Libya loses its place" on that market, he added.

Washington's embassy in Tripoli on Wednesday said it was "deeply concerned" by the Libyan oil closures and said they should end immediately.

On the political dimensions of the shutdown, Aoun limited himself to saying: "Apparently, those calling for the closure say they have demands for the development of their regions."

He said he had put in place a committee which is "in contact with actors in different regions" to try to end the shutdown.

- 'Natural resources' -

But Aoun also said he opposed "blackmail" as a means of pressure.

According to analysts, the latest blockade was triggered by the National Oil Corporation's agreeing to transfer $8 billion in oil revenues to Dbeibah's government in exchange for emergency operational funding.

This upset the eastern camp.

Libya sits on Africa's largest known oil reserves, but output sank to near zero at various points during its conflict.

Libya's oil production was between 1.5 million and 1.6 million bpd before the 2011 uprising.

"The Libyan state is rich in natural resources... and has assets for developing solar and wind power, ports, tourism," the minister said, calling for a reduction in fossil fuel dependency.

Libya depends on revenues from its oil and gas exports, which in 2021 raised more than $21.5 billion, the highest level in five years, the NOC said in January.

The NOC is one of the few institutions in the troubled country to have stayed intact -- and largely neutral in the face of political wrangling -- since 2011.

But relations have been tense between NOC chief Mustafa Sanalla and Aoun, who has repeatedly tried to sack him.

"Bickering doesn't interest us, only production," Sanalla has said.

In the interview, however, Aoun accused the NOC chief of not respecting laws governing the sector "and exceeding his prerogatives."

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