Libyan State Oil Firm Boss Sanalla Gets New Backing from Premier

(Bloomberg) -- The long-serving head of Libya’s state oil company will remain in his post, Prime Minister Abdul Hamid Dbeibah said in a decree, seeking to end a feud that’s roiled the OPEC member’s energy sector.

Dbeibah’s Sept. 14 decree, seen by Bloomberg on Sunday, effectively nullifies a decision late last month by Oil Minister Mohamed Oun to suspend the National Oil Corp.’s chairman, Mustafa Sanalla.

Oun claimed that Sanalla had traveled abroad without approval -- a “violation” of ministry policy. But the move was widely seen as an example of Libya’s convoluted politics and a tussle between vying institutions that risked causing a slump in the nation’s crude production.

The jostling is in part a consequence of a decade of conflict and rival governments in a country that sits on Africa’s largest crude reserves.

Sanalla, who’s held his post since 2014, has sought to keep the NOC out of the political fray that emerged amid a conflict between rival governments in the east and the west. The NOC head has effectively run the oil sector for years, including signing deals with international companies and representing Libya at Organization of Petroleum Exporting Countries.

While a United Nations-brokered deal led to the establishment of a unity government in March, that cohesion has yet to filter down to the various state institutions. The tensions are testing efforts to rebuild a nation mired in conflict since the 2011 ouster and killing of longtime leader Moammar Qaddafi. 

Oun, who assumed his post in March as the first Libyan oil minister in seven years, wants the NOC’s board to be changed and Sanalla removed. The re-establishment of the oil ministry created administrative overlap with the NOC, resulting in ambiguity over who’s best equipped to run the vital sector.

Protests

Relative political stability since the formation of the unity government has resulted in crude output hovering at almost 1.2 million barrels per day.

Protesters, however, recently briefly halted oil exports from three key terminals in the east, while others have also threatened to shut down fields such as Sharara, the nation’s largest. That signals how easily the situation in Libya can change.

Ensuring a stable flow of oil is pivotal for Libya’s political reconciliation and economic rebuilding efforts. Revenue from crude sales is the country’s main source of foreign income. Interrupting that cash flow could undermine political stability, including much-anticipated December elections.

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