Libya’s PM pushes for new chief of state oil company

Libya’s prime minister is trying to oust Mustafa Sanalla, head of the country’s National Oil Corporation, drawing the state oil body into a political stand-off that could lead to renegade general Khalifa Haftar gaining greater leverage over the Opec member’s oil revenue.

Libya’s oil ministry posted on its Facebook page early on Wednesday a decree signed by Abdul Hamid Dbeibeh, prime minister of the Tripoli-based government, in which he names a new board of directors of NOC headed by Farhat Bengdara, a banker who once served as governor of the central bank under Muammer Gaddafi, the dictator ousted in 2011.

Control of oil revenue has been at the heart of conflict in the divided country for most of the past decade. Backed by the US and the UN, analysts say, the NOC under Sanalla had tried to stay above the political fray as the organisation in charge of the oil wealth of all Libyans.

The appointment of Bengdara “will politicise the oil sector, something which Sanalla had carefully avoided doing”, said Peter Millett, head of the Libyan British Business Council, and a former UK ambassador to Tripoli.

Under the current system, NOC transfers the proceeds of oil exports to the Central Bank of Libya and those are used to fund the budget for the whole country. The NOC chair has traditionally come from within the sector and played a technocratic role.

The move comes at a difficult time for the oil sector. Forces allied to Haftar, who controls eastern Libya, have been blockading oil facilities since mid-April, forcing a sharp fall in the country’s exports at a time of high prices and global supply shortages as a result of the Ukraine war. Oil exports have dropped from 1.2mn barrels a day and “appear to be currently between 700,000 to 800,000 barrels per day”, said a western diplomat.

Although changing Sanalla to a chair favoured by Haftar would not necessarily give the military man access to a bigger share of the oil revenue, it will enhance his ability to press for a bigger share of the budget. “Politicising the oil sector is very dangerous,” said Claudia Gazzini, senior analyst at the International Crisis Group.

Gazzini said the change in leadership at the NOC could be part of a wider deal aimed at getting Haftar to switch his support to Dbeibeh, who heads the Tripoli-based government, and away from Fathi Bashagha, a rival prime minister who was endorsed by the eastern-based parliament but who has been unable to enter Tripoli.

“Dbeibeh feels that the only way he can stay longer in power is by entering into a deal with Haftar and peeling him away from Bashagha,” said Mohamed Eljarh, director at Libya Desk, a consulting firm. The deal under discussion, said Gazzini, was also expected to include changing the ministers of finance and defence to figures acceptable to Haftar.

The announcement sparked alarm. “We are closely following and concerned about the integrity of the NOC, and looking to see the restoration of oil production or any sign it will be restored, and the establishment of a Libyan mechanism or process for transparent management and oversight of revenue,” said a western diplomat.