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Libya's National Oil Corp, or NOC, has become embroiled in a new political battle as it seeks to defend its role as both policy setter and regulator in the oil and gas sector. NOC chairman, Mustafa Sanalla rejected plans from the internationally recognized government in Tripoli which would divide the state-owned company's powers.

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The UN-backed Presidency Council (PC) issued an order Monday dividing the authority of Libya's oil ministry between the prime minister's office and the NOC.

It also stripped Sanalla of his position as oil minister, a role he inherited by default in 2014 when nobody was nominated to fill the position.

"I have asked the Presidency Council to withdraw its recent resolution. It has exceeded its authority," Sanalla said in a statement late Monday on the NOC's website.



Under the order, the prime minister's office will assume the role of a traditional oil sector regulator -- signing contracts, supervising investments, approving projects, developing new legislation, and setting price policy.

NOC would be left to execute the PC's plans.

"The NOC will monitor the production and exportation processes, name Libya's representatives to attend meetings and conferences in the Arab world and all over the world, after consulting the prime minister. It will also suggest giving or taking away investment licenses, and specifying the daily oil and gas production in the country," the order said.

Sanalla has sought to remain neutral through Libya's political turmoil over the last three years.

"NOC has long supported the establishment of a genuine government of national accord able to speak for all Libyans," he said.

"Until we have a political settlement, our duty is to administer the country's oil resources in trust for benefit of the nation," he added.

Although it was the Presidency Council which issued the decree, Libya's parliament, based in Tobruk and known as the House of Representatives, has not lent it any support. In fact, it has been seeking to exert its own control over production.

"Only the House of Representatives, the legislature, has the power to make these changes," Sanalla said.

NOC was the sole operator of Libya's oil sector before the Qadhafi regime was toppled, with production dependent on a wide network of joint ventures across the country.

With Libya effectively divided by two rival political factions in 2014, NOC was also split with the established management still based in Tripoli while an eastern NOC operated independently from the eastern city of Benghazi.

After a number of attempts to export crude oil itself, the eastern NOC was brought back into the fold following a political agreement last summer.

It is now trying to break away again. Earlier this month, the rival NOC in the eastern city of Bayda said it was renouncing an agreement with the internationally recognized NOC in Tripoli last year to keep the two bodies together.

The problem has been exacerbated since fighting erupted in early March over the control of two major oil export terminals in the east of Libya -- Es Sider and Ras Lanuf. Briefly seized by a rival militia, the ports are back in the hands of the self-styled Libyan National Army, led by Khalifa Haftar, who supports the rival Bayda government.

Haftar's LNA forces now have a firm grip on most of Libya's eastern oil crescent region, and there is no credible army to oppose him.

Exports from Es Sider are now underway again, with one vessel currently loading a cargo bound for China.

--Adal Mirza, adal.mirza@spglobal.com
--Edited by Jeremy Lovell, jeremy.lovell@spglobal.com