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Libyan PM revokes oil minister's decision to oust NOC chairman: document

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Libyan PM revokes oil minister's decision to oust NOC chairman: document


Mustafa Sanalla to retain post according to Sept. 14 announcement

Power struggle between Sanalla, oil minister threatening exports

Crude exports at key terminals resumed earlier in Sept after protests

The Libyan prime minister has revoked the oil minister's dismissal of the chairman of state-owned National Oil Corp., according to a government announcement seen by S&P Global Platts, as the power struggle over running the country's oil wealth continues to affect the energy industry.

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NOC chairman Mustafa Sanalla will retain his post, Libya's Government of National unity prime minister Abdul Hamid Dbeibah said in announcement dated Sept. 14, according to the document seen by Platts.

On Sept. 6, the oil ministry put out a statement saying its recommendation on changing the board of directors of the NOC, including the dismissal of Sanalla as chairman, was "still in effect" despite the "serious difficulties and obstacles it has faced." Oil Minister Mohamed Oun in August had written a letter asking the GNU to reshuffle the board of NOC, in particular calling for the removal of Sanalla. Oun said Taher Al-Qahtani should take over as chairman of NOC and the minister's deputy Rafat al-Abbar should be appointed as a board member.

The power struggle between Oun and Sanalla over running the country's energy resources comes amid fears the confrontation will affect the country's exports following recent protest at oil terminals.

Disruption to oil exports

Crude exports from three key Libyan oil terminals -- Es Sider, Ras Lanuf and Marsal el-Hariga -- had resumed after a week of protests, NOC said Sept. 16.

But industry sources and analysts expect Libya to remain very prone to supply disruptions as the dispute between the oil ministry and NOC persists.

Loading operations at Es Sider and Ras Lanuf were halted by protestors demanding the removal of Sanalla, with support among the local Petroleum Facilities Guard that protects the key eastern ports.

S&P Global Platts Analytics expects more disruptions ahead in Libya as the dispute between NOC and the oil ministry lingers, with December elections expected to be another flashpoint.

In March, the GNU formed a new oil ministry, appointing Oun as its head. Since then relations between Sanalla and Oun have worsened, industry sources said, due to the clash over key oil policies, emanating from an overlap of duties.

Prior to March, the NOC, led by Sanalla, assumed a vast range of responsibilities, especially those related to exploration and production and representing the country at OPEC ministerial meetings, tasks that would normally be reserved for an oil and gas ministry.

Maintenance issues

Oun is keen on the ministry dominating oil policy and controlling the country's oil and gas licenses and wants the NOC to focus on growing oil production, according to Libya-based sources.

But with the country expected to hold parliamentary and presidential elections in December, Oun's own position remains vulnerable.

Sanalla, an engineer by background, has been the de facto leader and face of the Libyan oil industry over the past few years.

The protests at the oil terminal and the power struggle come as Libya's crude production continues to hover near 1.2 million b/d as technical and maintenance issues persist.

NOC is still hoping to pump as much as 1.45 million b/d by the end of the year but a lack of finance allocated for maintenance and repairs caused by years of political instability has made it difficult for NOC to maintain the assets, keeping a lid on output.

Libya exports mainly light-sweet crude grades such as Es Sider, Sharara and Brega. Its 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.