The Libyan government on Thursday replaced the head of the main National Oil Corporation in a dramatic move that prompted the United States to warn of an “armed confrontation” over the sector.
The North African country’s vast oil reserves have often been the focus of political disputes, but the NOK has remained largely neutral despite years of division since dictator Muamer Gaddafi was toppled in 2011 in a NATO-backed rebellion.
However, in a decree published on Wednesday, Abdulhamid Dbeibah’s unity government appointed former central banker Farhat Bengdara to succeed NOC chief and veteran technocrat Mustafa Sanalla.
On Thursday morning, Bengdara took office at the NOK headquarters in Tripoli, where he gave a press conference.
“Under the current conditions, it is crucial that Libya regains its oil and gas export capacity as soon as possible,” he told journalists.
“The oil sector has fallen victim to political infighting, but we will work to prevent political interference in the sector.”
– ‘Important’ for stability –
Dbeibah’s crackdown on Sanalla follows months of rising tensions in Libya after the country’s east-based parliament appointed a rival government led by former Interior Minister Fathi Bashagha and backed by strong military Khalifa Haftar.
Dbeibah has refused to cede power before the elections and Bashagha has so far failed to take office in Tripoli, raising fears of renewed conflict just two years after a landmark truce ended a ruinous attempt by Haftar to secure the to seize the capital by force.
The US Embassy on Thursday said it was following developments “with great concern” and stressed that the NOC was vital to Libya’s “stability and prosperity”.
Since April, pro-Haftar groups have been blockading key eastern oil facilities to put pressure on Dbeibah.
As a result, Libya’s crude oil and condensate exports have fallen from around a million barrels a day in March to just over 400,000 barrels a day so far in July, according to data intelligence firm Kpler.
The blockade has also contributed to a crippling power shortage that sparked angry protests earlier this month.
The blockade also comes amid a supply crisis in global oil markets, rattled by the war in Ukraine, prompting consumer nations to pressure other producers to ramp up production.
US President Joe Biden is expected to press Saudi Arabia on the issue when he visits the kingdom this weekend.
– Blockade over? –
Libya now sits on Africa’s largest proven crude oil reserves and has easy access to European markets.
US Ambassador Richard Norland, who has been working on a mechanism to manage the highly controversial revenue from Libya’s crude oil sales, said Sanalla’s replacement “can be challenged in court but must not become the subject of an armed dispute.”
However, the appointment of Bengdara, a Gaddafi-era central banker who is said to be close to Haftar, has sparked speculation that Dbeibah has struck a deal with the military ruler to allow him to retain power in Tripoli.
Emadeddin Badi, a senior Atlantic Council official, said Bengdara’s appointment was “the product of a temporary rapprochement between Dbeibah and Haftar, but it could be the basis of a broader deal”.
“Dbeibah gets several things from it,” Badi told AFP.
“He’s regaining access to government funds, it’s hampering the US financial mechanism or the momentum to implement it, and Haftar is likely to lift the (oil) blockade and limit, if not end, his support for Bashagha.”
Aydin Calik, an energy analyst at the Middle East Economic Survey (MEES), said he expected the oil blockade to be lifted “shortly”.
But he warned that the new board would face challenges, including from Sanalla, which has long mediated disputes to keep Libya’s crude oil flowing and has positioned itself as an interlocutor with foreign powers and oil companies.
Calik told AFP that “the uncertainty over who is in charge at NOC raises questions: who can legitimately export oil? Will international oil majors recognize the new NOC board? What could this mean for their contracts?”.
In a defiant video message Wednesday night, Sanalla told Dbeibah that “this institution belongs to the Libyan people, not you or the Dbeibah family,” adding that “your government’s mandate has expired.”
Bengdara insisted on Thursday that he was selected for the job because he is “non-partisan” and “can travel anywhere in Libya”.
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