London — A major rift has opened up between Tripoli-based National Oil Corporation and one of its key fuel distribution units, threatening the unity of Libya's oil and gas sector.
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A number of staff from NOC's eastern-based subsidiary Brega Petroleum Marketing Company (BPMC) have broken away from the state-owned oil firm, accusing it of deliberately reducing kerosene and jet fuel supplies to the east. BPMC is the NOC entity in charge of fuel and gas distribution within Libya.
Libya-based sources told S&P Global Platts Thursday that the latest move could result in a further spilt within the country's already fractured oil industry, potentially paving the way for the east of the country to start importing and exporting crude and products independently.
"This could set a dangerous precedent, and there would be more attempts by the east to import products and export crude," according to one source active in the Libyan oil market.
POLITICIZING LIBYAN OIL
Sources said BPMC employees formed a rival company this week, adding that it will now independently start importing petroleum products.
The new company is headed by Kheralla Saleh Abdelsalam, who was on the board of directors of BPMC, sources added.
In a statement, NOC condemned attempts to split up its BPMC subsidiary and said it rejected "false allegations" that fuel supplies to the eastern region are "inadequate."
NOC Chairman Mustafa Sanalla said this was another attempt "to partition and politicize" Libya's oil sector.
"Fuel supply to the eastern and central regions is more than adequate for civilian purposes," Sanalla said. "The real motive behind this attempt is to set up a new illegitimate entity for the illegal export of oil from Libya."
The divisions come amid a backdrop of protracted unrest in Libya. The self-styled Libyan National Army from the east has been clashing with western-based forces loyal to the UN-backed Government of National Accord in Tripoli and other militia groups for almost five months now. Despite the conflict, oil output in Libya has been on an upswing and exports have been largely unaffected.
But a Libya-focused security analyst said the latest development means "we could get closer to an oil and gas disruption" if the unrest persists.
A rival company calling itself NOC East has been repeatedly trying to sell oil independently of Tripoli-based NOC for some time. These attempts have intensified since the conflict between LNA and GNA began.
In April, NOC East tried to sell 2 million barrels of Sarir/Mesla crude to a UAE-based company, according to several sources. Representatives at NOC East were unavailable for comment.
The parallel company, based in Benghazi, is not internationally recognized and the Tripoli-based NOC has threatened legal action over anyone buying oil from it, as well as urging the UN and Libya's western allies to help defend its sovereignty over oil exports.
During a previous breakdown in relations between the rival NOCs in 2016, an attempt by NOC East to sell a 650,000 barrel cargo saw the tanker refused entry to Malta.
Libya's crude output averaged 1.02 million b/d from January to August this year, compared with levels of 948,333 b/d and 807,500 b/d in 2018 and 2017, respectively, according to the S&P Global Platts OPEC survey.
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