By John Lee.
The National Oil Corporation (NOC) has warned that Libyan oil production may fall precipitously over the next nine months if the government continues to withhold already approved budgets.
NOC recorded August 2019 revenues of approximately 2 billion USD, a decrease of 117 million USD (5%) compared with July, and an increase of 466 million USD (30%) compared with August last year. NOC’s revenues come from sales of natural gas, crude oil and assorted derivative products, in addition to taxes and royalties received from concession contracts.
Chairman Mustafa Sanalla said:
“The Corporation could increase production substantially, adding hundreds of millions to monthly state revenue. But that will only happen if NOC’s budget is disbursed. If the corporation’s allocations are not released without delay, Libyan oil production will be hundreds of thousands of barrels per day lower than it should be. That will have an extremely negative effect on national income.
“The Presidential Council’s (PC) Resolution 375, dated March 20, 2019, approved the Corporation’s budget for 2019, with operational and capital expenses 39% and 40% lower than requested. By July, without NOC’s knowledge, the PC had gradually reduced the approved operational and capital budgets by 150 million and 100 million dinars respectively.
“The rest of the allocations were late. Capital budget allocations for May, June, July and August were only disbursed mid-September, resulting in unnecessary debt accumulation and some of the operating companies refusing to provide services, due to salary delays for Al-Jowfe, National Workover and drilling Company and NOFCAT employees.”
The chairman thus urged the Presidential Council to release allocated budgets on time, adding that failing to do so would negatively affect the oil sector and result in a sharp decline in revenues.
Sanalla attributed the lower August revenues to the closure of the Sharara-Zawiya trunk pipeline during the first half of the month, necessitating the shut down of the Sharara field, a loss only partially compensated by taxes paid by partners following the 2018 gas payment invoices.
NOC publishes monthly revenue reports in accordance with its good governance policy and international transparency standards.