Libya’s hopes to boost crude exports have been dealt a blow after the head of the National Oil Corporation (NOC) objected to a deal between the government and local guards to reopen key ports.
In a letter seen by Reuters to U.N., Libya envoy Martin Kobler and a number of oil and diplomatic officials, NOC chairman Mustafa Sanalla, said it was a mistake to reward the head of the Petroleum Facilities Guard (PFG),Ibrahim Jathran, for a blockade of the oil ports of Ras Lanuf, Es Sider and Zueitina.
The PFG confirmed on Friday that it would implement an agreement with Libya’s U.N.-backed Government of National Accord (GNA) to reopen the ports within days, following a visit by Kobler to meet Jathran in Ras Lanuf.
The terms for ending the blockade have not been made public, but an initial payment for salaries for Jathran’s men has been agreed, sources familiar with the matter say.
In the letter, Sanalla said the deal included payments that would encourage other groups to disrupt oil operations in the hopes of a similar payout.
The letter said: “It sets a terrible precedent and will encourage anybody who can muster a militia to shut down a pipeline, an oilfield, or a port, to see what they can extort.”
Sanalla said the NOC would not lift force majeure at export terminals if a payout went through due to the risk that the corporation would face liabilities.
The letter said should any court cases arise internationally for losses stemming from the blockade, “we, as NOC, are determined not to be attached to these lawsuits.”
The NOC also threatened to withdraw its recognition of the GNA’s leadership or presidential council.
A PFG spokesman, Ali al-Hassi, would not confirm whether any money had been received, but said the guards’ salaries should be paid now that the force was fulfilling its promise to open the ports.
Sanalla’s letter said that due to attacks from Islamic State (IS) militants and other damage, exports from the ports would struggle to surpass 100,000 bpd in the near term, a fraction of their designed capacity.
He added that NOC’s largest subsidiary, Agoco, would be able to increase production by that amount if it received its operational budget from the government.
“To pay Jathran instead of Agoco makes no sense, politically, economically or legally.”
