Fears of Oil Production Shutdown Escalate in Libya


The Libyan arena has experienced new shifts regarding the distribution of oil wealth, which constitutes nearly 95% of the nation’s income. Amid these developments, fears of a possible halt in oil production and export are resurfacing.

The change was initiated with the Libyan House of Representatives (HoR) release of Decision No. 49 for the year 2023. The resolution mandates the creation of a committee, led by Farhat Bengdara, the Head of the National Oil Corporation (NOC), to distribute the wealth among the citizens and regions.

Osama Hamad, Libya’s designated Prime Minister, convened with Bengdara at the Prime Minister’s office in Benghazi. The meeting aimed to discuss the enactment of the HoR decision and the formation of the committee. The team is to comprise representatives from the Ministry of Planning, Finance, the Central Bank, the Administrative Control Authority, and the Audit Bureau.

However, the NOC Chairman made a public statement on Tuesday clarifying that his interaction with Hamad was intended to alleviate tensions and convince all political factions of the necessity for consensus on a spending mechanism.

He highlighted that the meeting bore no relevance to the operations of the NOC. The NOC functions under the auspices of the unity government that appointed its board of directors, leaving no room for doubt.

Further, Bengdara reassured that the corporation operates with the Government of National Unity (GNU)’s support and that the armed forces provide high-level security and protection for its operations in the oil fields and ports.

He also mentioned that the meeting concluded with an agreement to foster cooperation amongst all parties and prevent escalations. Despite not foreseeing an oil shutdown, he underscored the importance of striving earnestly to deter it through a fair and transparent expenditure mechanism. The NOC’s Head maintained that a shutdown serves no political party’s interests, as the resultant impact would be disastrous for both the citizens and the state.

The designated Libyan government responded to Bengdara’s remarks. Mohammed Baio, the Head of the media institution of the Parliament-designated government, declared that the meeting between Hamad and Bengdara was not a casual discussion or an exchange of ideas.

Baio stressed that the meeting’s objective was to reach a consensus on a precise mechanism that ensures the equitable distribution of revenues from oil and gas sales.

As the NOC is responsible for producing and exporting oil and gas and is trusted with managing its revenues, these funds cannot be left to dissipate and fall prey to corruption by the expired-term government.

Observers perceive the GNU, led by Abdelhamid Dbaiba, as replicating the path of the reconciliation government. They are doing this by using Libyan resources to support militias in western Libya while neglecting service provision to citizens, particularly in the eastern and southern regions.

They insisted that the only viable course to compel the GNU government to adhere to the HoR procedures and peacefully relinquish power, is to cease oil production. Given the upcoming elections scheduled for the end of this year, the country is in dire need of a unified government that governs the entirety of Libyan territory.