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Libya forms new oil ministry as NOC eyes releasing revenues

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New York — Libya's state-run National Oil Corporation is poised to release oil revenues to the central bank after the interim Government of Unity (GNU) was sworn in on March 15, creating a new oil ministry.

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Last year, NOC started using the Libyan Foreign Bank in Tripoli to hold oil revenues instead of paying funds directly to the government amid political uncertainty.

"This is in line with the temporary arrangements in force that ended with the formation of the government of national unity," NOC said in a statement over the weekend.

The GNU has also appointed a new Ministry of Oil and Gas, which will be led by Libya's former OPEC governor Mohamed Oun. NOC's chairman Mustafa Sanalla said he is looking forward to working with the ministry in "expanding the capabilities of the Libyan oil resources."

Libya produces around 1.2 million b/d of mainly light-sweet crude grades such as Es Sider, Sharara and Brega. It's main export markets are in southern Europe and China. The producer -- which holds Africa's largest reserves -- is excluded from quotas limiting production by OPEC.

NOC and the Central Bank of Libya recently clashed on the distribution of oil revenues as the country's crude output rose sharply after years of disruption. Late-last year, NOC said it would refuse to release its oil revenues to the central bank until a unity government was formed.

Sanalla had previously warned that money from crude sales would be held until the bank showed "clear transparency" on how it allocates funds.

The dispute over the distribution of oil revenues was one of the main reasons for an eight-month-long Libyan National Army (LNA) blockade of oil facilities that ended in September.

"This is a positive step toward diplomacy and reconciliation ahead of Dec. 24 elections. With all sides on board for now, we expect less volatility at the margin over the coming weeks and will likely revise up our forecast for March from 1.1 million b/d to 1.2 million b/d," Platts Analytics said in a recent note.

Increase production

NOC also said the Prime Minister Dbeibah had given "instructions" to start stockpiling liquid fuel in power plants, drinking water desalination facilities and fuel distribution stations ahead of Ramadan in April.

The outbreak of relative political stability in Libya comes after almost three years of a prolonged civil war between the Government of National Accord and the self-styled LNA, which resulted in a sharp fall in production last year.

Last week, Sanalla said Libya was looking to increase its production to 1.45 million b/d by the end of 2021. However, this output level will be contingent on NOC receiving its full annual budget, along with improved security at its oil infrastructure.

A large part of Libya's aging facilities have been wrecked by civil war, militant unrest and terrorist attacks, leading to general neglect over the past decade.

NOC said on March 14 that oil revenues from sales reached $1.23 billion in February, compared with $1.41 billion in the previous longer month.