Mustaffa Sanalla, chairman of Libya’s NOC – National Oil Corporation, is warning as loud as he can that Haftar’s blockade on Libya’s oil infrastructure will soon lead to disaster. Sanalla further warns that the world powers will be themselves complicit in Libya’s collapse – a collapse of rule of law – if they fail to act to pressure Haftar to allow the oil sector to get back online. However, he claimed, too many Western powers seem content to watch as countries that committed to uphold the embargo openly break their promises.
Sanallah said his country was facing “a disaster and a nightmare”, as the blockade of Libya’s oil ports and refineries continues. Production, which was at 1.3 million bpd is down to 260,000 bpd and could soon drop as low as 70,000. The cumulative losses so far amount to nearly $450 million. As Libya’s cash reserves deplete, both governments, the Tripoli-based GNA and Tobruk based House of Representatives will find it increasingly difficult to pay 1.3 million public sector salaries. At the same time, there could be long-term damage to the oil pipelines themselves, as crude oil left in pipes corrodes irreparably corrodes them.
Sanalla’s voice is increasingly important. As the conflict drags out and another effort to spark a political process is likely to falter, he is seen as one of the few “neutral voices” left in the country with a high standing domestically and internationally.
“The international community has to understand that if it tolerates or even rewards those who break the law in Libya, then it will be complicit in the end of the rule of law in our country. And that means more corruption, more crime, more injustice and more poverty.” Sanalla cautioned.
He further called out countries who were “happy when they secure agreement from wide range of countries … calling for ceasefires and political settlements. But they know that many of those countries will sign anything and then continue to supply weapons to the war fighters…(and who) poison…social media with their sophisticated disinformation campaigns, undermining the ..solutions they” officially support.
Sanalla called for “not just words but action from UN security council…pride themselves on their support for rule of law” “world superpowers have to give the facts to the Libyan people about responsibility for the shutdown of the oilfields”. Sanalla warned that if blockaders were rewarded “you will see it repeated, not just in Libya but potentially across the whole of the Middle East…people who feel they have a grievance decide its worth trying an oil blockade”.
Libya’s oil production is set to reach the lowest levels since Gaddafi’s overthrow in 2011, according to the National Oil Corporation – the NOC. As the two sides travelled to Berlin almost a week ago for the first serious cease fire and peace talks, tribal elements backing Haftar forced a shutdown of production facilities and have caused power blackouts in parts of the country.
NOC Chair Mustaffa Sanalla told The Financial Times that output had already dropped from pre-Gaddafi levels of 1.3 million barrels per day (bpd) to around 400,000 bpd since Haftar’s offensive. Since the blockade Friday, that production is expected to plummet to a mere 72,000 bpd “within days” or even weeks”, according to the Financial Times.
According to Turkish media reports, this has led to a loss of over $255 million in just the first six days since the facilities were closed, an average daily loss of nearly $43 million.
Haftar’s LNA already controlled most of Libya’s key oil terminals, and prior to the Berlin conference, shut down most of Libya’s crude exports, a key source of government income, in order to increase pressure on the GNA to end its new cooperation agreements with Ankara, and remind world powers that he and not the GNA controls the majority of Libya’s infrastructure and resources.
According to Sanalla, the loss of gas production, which is a byproduct of the crude oil extraction process, has affected the flow of gas to power stations, causing nation-wide shortages. It has also affected petrochemical production, which also makes use of natural gas, to allow the diversion of gas to the power stations.
Sanalla noted that most of Libya’s energy reserves are onshore and the country has limited storage capacity, with no export routes. He further warned that the reduced production will severely deplete Libya’s cash reserves.
The interruption to oil flow could disrupt Sanalla’s plans to raise Libya’s oil output to 1.5 million bpd within the year and to 2.5 million bpd over the next decade. Such incidences, and the ensuing chaos also discourage protentional foreign investors, crucial to grow and update the sector.
According to Libya’s Central Bank, Libya’s oil and gas revenues decreased by 6% in 2019. A majority of state income comes from oil and gas revenues. Revenue fell to 31.4 billion Libyan Dinars (USD 22.49 billion) in 2019, down from 33.5 billion dinars in 2018.
Although the Tobruk-based government established a parallel central bank and controls most of Libya's oil production, the Tripoli-based central bank retains control over oil revenue, which is channelled through the National Oil Corporation.