London — Libya's National Oil Corporation wants to create an oil security force to protect its fields and infrastructure from all-too-frequent attacks and sabotage, its chairman Mustafa Sanalla said Tuesday.
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The country's beleaguered industry has frequently been at the mercy of groups vying for control of valuable oil assets, with armed attacks on key pipelines and production facilities. The 350,000 b/d Sharara field, for instance, has remained shuttered since December 8, and Sanalla said he would not reopen it for production until its security is guaranteed and the armed forces occupying it leave.
"We need a national force, a national Petroleum Facilities Guard, not a tribal Petroleum Facilities Guard," Sanalla told reporters on the sidelines of a Chatham House energy conference in London.
In a presentation at the event, Sanalla said a preferred solution for the crisis at the Sharara field was for "a professional Petroleum Facilities Guards force managed by National Oil Corporation" to secure the infrastructure.
The Petroleum Facilities Guard that had protected Libya's oil facilities has in recent years devolved into tribal factions, each working for its own private gain, rather than in the national interest, Sanalla said. The Sharara field was shut in after armed groups, along with the help of local people, occupied the site in protest over economic conditions and frequent power outages that the south of the country has been facing.
Sanalla said he is empathetic to their concerns but that Libya's oil assets should not be held for economic ransom. To protect oil resources for the good of the country, the PFG should be reformed with new leaders to end factionalism, he added.
"I would love to have the timeline," he said, when asked when the force majeure on Sharara might be lifted. "Before I answer the question, I have to say the safety of our staff is top priority. There can be no compromise on this issue. Then the rest we can discuss."
Analysts with Medley Global Advisers said the standoff between the PFG unit controlling Sharara and the NOC showed no signs of abating.
"Any forced removal of the PFG unit would bring its own set of risks,and with no credible force stepping up to the task, the NOC could find itself in a longer stand-off unless it backs down on its demands," analysts Mohammad Darwazah and Johannes Van Der Tuin said in a recent note. "Unless the NOC softens its demands and can find a compromise over revamping the field's security arrangement without evicting the PFG by force, Libya's oil production remains highly vulnerable to downside risks."
As a potential olive branch to the PFG forces at Sharara, Sanalla said NOC would be amenable to a "mixed force," including local tribal members "within a negotiated security framework."
But the militia must end its occupation of the site, he said, before selection of "disciplined people from the PFG militia" could be considered.
Training the new forces would be vital.
"This will take some time, but we will do it," Sanalla said. "We have to have the right budget for this one ... We have to select good staff."
Libyan oil output recovered sharply last year even though security and political challenges continued to impede the sector.
"We achieved our highest production and revenue levels for the past five years, which we now declare openly on a monthly basis, with $24.4 billion transferred to the Libyan Central Bank in 2018, thanks to an average production level of 1.1 million b/d," Sanalla said.
S&P Global Platts, which publishes a monthly OPEC production survey, pegged Libya's 2018 production at an average of 948,333 b/d. That was still its highest annual average since 2012, when it pumped 1.40 million b/d, according to Platts survey data.
NOC officials told Platts on Tuesday that they were planning for a $60 billion budget, with $20 billion allocated to recover Libya's crude output to pre-civil war levels of 1.6 million b/d by year end, though Sanalla added that NOC has not received its entire capital spending allocation from Tripoli in the last two years.
INTEREST FROM IOCs
Despite security concerns, some international oil companies have expressed interest in resuming exploration activities in the war-torn country which contains the largest oil and gas reserves in Africa.
Sanalla said Austria's OMV will start exploration work in the Sirte Basin "soon" and that NOC is conducting some technical work with Italy's Eni and BP, who are hoping to resume work in the onshore Ghadames basin.
Russia's Gazprom and Tatneft are also expected to resume upstream working this year, he added.
Sanalla also said NOC was very close to approving Total's agreement to take a 16.33% stake in the Waha concessions from Marathon Petroleum for $450 million.
"We are in the final stages," he added.
Total had announced this in March 2018 but the deal was still outstanding amid concerns the price was too low and speculation that NOC wants to make a counteroffer according to various news reports.
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