Libyan pay dispute returns, could lead to some oil port closures

London — The dispute over so-called field allowances paid to Libya's Petroleum Facilities Guard has returned, with the potential to lead to some oil terminal closures later this month, industry sources said April 12.

The PFG, which controls key eastern terminals and some oil fields in Libya, has clashed with the finance ministry over salary and field allowance payments in the past few months.

On April 11, the PFG at Libya's 300,000 b/d Es Sider terminal wrote a letter threatening to shut down exports by April 25 if their March salaries did not include field allowances.

Last week, the branch of the PFG stationed at the 300,000 b/d Sharara field also threatened to halt operations at the site by April 21 due to lack of field allowance payments.

The PFG had been paid their January and February salaries but the field allowances were not included, according to sources.

"They want the field allowances to be included in March salaries. So, we will know soon if the salaries include that field allowances. Salaries due to be disbursed soon," a source said.

The 220,000 b/d Marsa el-Hariga terminal was shut for almost three weeks earlier this year with similar threats made at the time from the PFG posted at the Brega, Es Sider and Ras Lanuf terminals. But payments were made not longer after the demands.

Sources said delays in salary payments were common in Libya and with the formation of the Government of National Unity last month, that was to be expected.

"The main reason behind delay now is the fact the GNU still does not have its budget approved," the source said.

Strong recovery

Libya's production recovery has gathered pace in the past few months.

The North African producer pumped 1.19 million b/d in March, its highest since June 2013, according to the monthly S&P Global Platts OPEC Survey.

State-owned National Oil Corp. is planning to pump 1.45 million b/d by the end of 2021, as some eastern oil fields resume production.

Libya's oil sector has been wrecked recently by civil war, militant unrest and terrorist attacks, but the recent political progress bodes well for the country.

S&P Global Platts Analytics said it expected increased stability for the oil sector in the near term due to the new interim government.

"But volatility from mercenaries and various militia groups on the ground will persist," it said in a recent note. "With risk more likely into Q4 2021 with scheduled Dec. 24 elections."