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Libyan oil minister back in post after legal probe

Highlights

Mohamed Aoun was suspended in March due to 'legal violations'

Oversight body lifted suspension after completing probe on May 12

Aoun opposed deals with oil majors, criticized NOC overstepping

  • Author
  • Charlie Mitchell
  • Editor
  • Dan Lalor
  • Commodity
  • Crude Oil Natural Gas Upstream

Libya's oil and gas minister, Mohamed Aoun, has made a surprise return to his post after a two-month suspension by an oversight body over what it dubbed a "legal violation".

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In a statement on its Facebook page, the oil ministry said Aoun was back at work, carrying out "his duties at the office of the ministry".

The Administrative Control Agency, which suspended Aoun on March 26, completed its investigation May 12 and lifted the precautionary suspension. The ACA was set up to supervise government performance.

Representatives of the minister declined to comment further on Aoun's return to work.

Libya has been gripped by chaos since the NATO-backed toppling of Moammar Qadhafi in 2011 and has rival governments in the east and west.

Aoun, appointed in 2021, is part of the Tripoli-based internationally recognized Government of National Unity in the west, although his relationship with GNU prime minister Abdul Hamid al-Dbeiba is said to be strained.

While oil production has stabilized in recent years and reached 1.17 million b/d in April, the highest level since February 2023, according to the monthly Platts OPEC Survey from S&P Global Commodity Insights, political actors still have the capacity to disrupt oil flows.

Eastern warlord Khalifa Haftar cut output to 650,000 b/d in mid-2022 with a blockade by his Libyan National Army.

However, in recent months, analysts have pointed to a reorientation of Libyan politics around Dbeiba, Haftar and Farhat Bengdara, the chair of state-owned Libyan National Oil Company, which could preserve the country's oil output and usher in a period of economic and political stability, albeit falling short of reunification.

The oil sector is still plagued by accusations of corruption and fuel smuggling, while several political processes to bring about long-delayed elections have opened new fronts for fights between powerful stakeholders.

Sources told Commodity Insights that Aoun's suspension could be related to his opposition to deals with international oil companies, including the key NC-7 development. The 2.7 Tcf project, which holds an unspecified quantity of oil, is the subject of talks between NOC and Eni, TotalEnergies, ADNOC and Turkey's TEC.

But Aoun has criticized the deal -- as well as talks on the Waha field with TotalEnergies and ConocoPhillips -- on the grounds that the terms were too preferential, while also slamming NOC for overstepping its mandate. Rows between key stakeholders in the oil sector have made investors jittery in recent months.

Aoun was replaced by his deputy, Khalifa Abdul Sadiq, who was expected by analysts to unblock major deals with IOCs.

"I doubt [Aoun] will achieve much now, besides the usual criticism," said a well-placed security source, adding that ties between Aoun and Dbeiba had not improved.

Libya's light, sweet crude is popular with European refiners. As production and exports have risen in recent months, competitive Libyan barrels have outpaced comparable crudes, including US and Nigerian, into the thirsty Mediterranean market.