Protests are brewing at two of Libya’s key eastern oil terminals as the power struggle between Libya’s oil minister Mohamed Oun and the chairman of state-owned National Oil Corporation Mustafa Sanalla threatens to impact the country’s oil exports, industry and shipping sources said.
Protestors at the 300,000 b/d Es Sider terminal are demanding the removal of NOC chairman Mustafa Sanalla, with support among the local Petroleum Facilities Guard which guards the key port.
These demonstrations have resulted in some delays already, sources said. The Suezmax Yannis P has still not fully loaded a cargo of Es Sider crude since its arrival at the port a few days ago, according to Platts cFlow trade-flow analytics tool.
Meanwhile at the 250,000 b/d Marsa el-Hariga terminal, young graduates have blocked the main gate of the key port and are demanding jobs, sources added.
This comes amid an increasingly confrontational power struggle between Oun and Sanalla.
On Sept. 5, Sanalla was retained as chairman of the state-owned oil company after a meeting with the Libya’s GNU prime minister Abdul Hamid Dbeibah, along with Oun and deputy oil minister Refaat al-Abbar.
But on Sept. 6, the oil ministry put out a statement saying its recommendation on changing the board of directors of the National Oil Corporation, including the dismissal of Sanalla as chairman, was “still in effect” despite the “serious difficulties and obstacles it has faced.”
“Sanalla’s reinstatement will likely contribute to further protests in the sector and could lead to a closure of terminals in the eastern region,” according to a recent note by Whispering Bell, a risk management company covering North Africa.
Libyan crude production has recently been hovering around 1.1-1.2 million b/d but many expect output to be volatile in the lead-up to the Dec. 24 elections. The OPEC member has also been facing issues arising from its exhausted infrastructure and a lack of funds.
This also comes a backdrop of violence in the Tripoli, which saw the heaviest clashes since the GNU took over in March.
Sanalla vs Oun
S&P Global Platts Analytics said the standoff casts an ominous cloud over the oil sector ahead of the December elections.
“If the election goes ahead, or even if it doesn’t, oil revenues could become a target, while infrastructure shut-ins are a common way for warring sides in Libya to increase leverage and deny revenue to opponents,” it said in a recent note. “Given the lack of any imminent threat, we forecast crude production of 1.2 million b/d through December, but conditions could quickly deteriorate before or after the election.”
On Sept. 2, Sanalla criticized Oun, accusing him of fueling divisions in the oil sector and failing to support the state-owned company.
Relations between Oun and Sanalla have been sour since March, when a new oil ministry was set up by the Government of National Unity, with the two men clashing over key oil policies. Oun wants the NOC to focus on oil production and not control the country’s oil and gas licenses.
Since the civil war of 2011, Libya’s profitable yet fragile oil sector has been a flashpoint, and a new power struggle could undo some of the progress the North African oil producer has made recently.
Prior to March, the NOC, led by Sanalla, assumed a vast range of responsibilities, especially those related to exploration and production and representing the country at OPEC ministerial meetings, tasks that would normally be reserved for an oil and gas ministry.
Sanalla has been in charge of NOC for seven years now. Despite numerous civil conflicts, Sanalla has helped the NOC maintain a large chunk of its production capacity, and has kept it largely politically neutral.
Source: Platts