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article imageOp-Ed: Rival Libyan National Oil Companies (NOC) agree to unify

By Ken Hanly     Jul 2, 2016 in Business
Tripoli - The heads of the rival National Oil Corporations (NOC) in Libya have agreed to a unified structure with just one NOC. The move will be welcomed by the oil industry and could lead to a quick increase in production.
Before a meeting in May at which the two rival officials had agreed in principle to a unified NOC, the two sides fought over whether the Tripoli NOC backed by the GNA or the Tobruk branch backed by the HoR had the right to export oil. Attempts by the eastern NOC to export oil had been foiled when a tanker was forced to sail to a western port to unload its oil.
Libyan oil industry leaders claimed that Libya could quickly double its production to over 700,000 barrels per day if conditions were stabilized. Before Gadaffi was overthrown production was 1.6 million barrels per day. There still may be problems increasing production as there is rivalry between various militia groups that can disrupt production.
The agreement sees Mustafa Sanalla, who was chair of the Tripoli-based NOC remain as chair. The head of the eastern-based NOC Naji al-Malghrabi will serve as a board member of the new NOC. If the new structure revives oil production and exports, it could help finance the struggling UN-backed Government of National Accord. It is not clear how the revenues will be divided. No doubt there is agreement that a certain amount will go to areas controlled by the rival HoR. These important details are not reported.
Sanalla said: “This agreement will send a very strong signal to the Libyan people and to the international community that the Presidency Council is able to deliver consensus and reconciliation." However, the agreement violates the position that the NOC based in Tripoli was recognized by the UN, the international community, and the GNA as the sole legitimate NOC. The UN and GNA insisted that any parallel body should not be dealt with at all. Yet the same NOC negotiated with the eastern parallel institution to produce what is in effect a new NOC. Al-Maghrabi said that both men made a strategic choice to put divisions behind them since there was no other way forward. The division had led to a situation where production sunk as low as 200,000 barrels in May. There are hopes that the new structure will be able to help negotiations to open the El Sharara and El Feel oil fields that are closed to disagreements with local groups.
A budget was agreed upon for the rest of the year. There was also agreement that infrastructure repair and upgrading was a prime goal, especially in Benghazi. The agreement anticipates Benghazi being the new headquarters of the NOC. There may be some negative reaction to this within the GNA as Benghazi is not even in an area controlled by the GNA. The NOC is already intending to hold board of directors meeting in Benghazi if security conditions permit.
The join NOC will present reports both to the Presidential Council (PC) of the GNA and also to the House of Representatives (HoR). The NOC recognizes the HoR "as the highest executive and legislative authorities within LIbya". This is ludicrous and incoherent. The HoR becomes the legislature of the GNA once it votes confidence in it but until that time there is no legislature in Libya if the GNA is the sole government. The HoR mandate ran out last October and was not legally extended. However, it has a function as part of the Libya Political Agreement of voting confidence in the GNA and in doing so making itself into the Libyan legislature as part of the GNA. The recognition is bizarre. Does it mean that the HoR can pass laws and that the GNA areas will be subject to them? The GNA for pragmatic reasons appears to be giving up in practice its claim that it is the sole legitimate government. The rival HoR has managed to have the NOC headquarters moved to an area it controls and no doubt received a guarantee to a certain amount of revenue.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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