Wednesday, 8 April 2015

Libya Fight Over Oil Money Complicates Efforts to Boost Exports

In Oil & Companies News 08/04/2015

Libya’s elected government said it is opening an overseas bank account for crude revenue to bypass rival Islamist authorities in the capital, adding uncertainty to the North African country’s efforts to boost exports.
“This measure is meant to ensure liquidity for the government without going through the central bank in Tripoli,” Fathallah Al-Suhaiti, chairman of the elected parliament’s national security and defense committee, said Tuesday by phone from Tobruk in eastern Libya.
Libya, holder of Africa’s largest oil reserves, has been split since last year when a coalition of Islamist militias captured Tripoli, forcing the elected government to move to the eastern region. The conflict has damaged or shut oil fields, pipelines and ports, reducing the nation’s crude output to no more than 600,000 barrels a day. Libya pumped almost 1.6 million barrels before the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule.
The elected and internationally recognized government of Abdullah al-Thinni will open the account within two weeks at a bank in the United Arab Emirates, according to Al-Mabrook Abu Seif, chairman of the National Oil Corp. in the east of the country. The government will then transfer the funds to the central bank’s branch in the eastern city of al-Bayda, Abu Seif said Monday in an interview.
Bank’s Neutrality
The central bank in Tripoli, which currently collects all revenue from Libyan oil exports, has refrained from taking sides in the country’s internal conflict.

Thinni’s government objected to this neutrality and in September announced the replacement of the central bank’s governor, Saddek Elkaber, by Ali al-Hibri. It also criticized the neutrality of National Oil’s offices in Tripoli and appointed Abu Seif to replace Mustafa Sanalla as the company’s chairman in November. The Islamist-backed government continues to deal only with Elkaber and Sanalla.
Elkaber, the Tripoli-based central bank governor, declined to comment Tuesday on whether he would approve a transfer of funds from the U.A.E. to the central bank’s branch in al-Bayda. Al-Hibri, the rival bank governor in al-Bayda, declined to comment on the feasibility of the offshore payment system.
The Thinni government appears to be trying to secure access to oil revenue, although this will be difficult given disputed control over many of Libya’s fields and export terminals, said Robin Mills, an analyst at Dubai-based Manaar Energy Consulting.
“International buyers will be concerned about who they can legitimately deal with,” he said Tuesday in e-mailed comments.
Thinni’s government controls five of Libya’s nine oil export terminals. The Islamist-backed government controls two, in the west, and the remaining two are offshore platforms.

Source: Bloomberg