Libyan official warns disruptions damaging oil sector

TRIPOLI Tue Jul 2, 2013 12:50pm EDT

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TRIPOLI (Reuters) - Incessant disruptions to Libya's oil sector risk crippling the North African country's economic lifeline and choking off state revenues, the head of a parliamentary committee overseeing the energy industry warned on Tuesday.

In the past week, new protests have shut down several Libyan oilfields, cutting output by around a third, as the country's new rulers struggle to maintain stability in an industry that accounts for 95 percent of state revenues.

Naji Mokhtar, head of the energy committee in Libya's General National Congress, the legislative authority, said Libya could lose customers if the situation was not addressed.

"Confidence in us as an oil producer is on edge," Mokhtar, in charge of the committee for around four months, said in a telephone interview. "The situation now is very dangerous, Libya is on the way to losing control of the oil sector. If the situation continues like this, the state will be without funds."

While Libya returned to pre-war production levels of around 1.6 million barrels per day (bpd) following the 2011 uprising that ousted Muammar Gaddafi, output has fallen significantly several times due to protests and strikes.

Output now stands at around 1.16 million bpd, a senior oil industry source told Reuters on Monday.

With fields such as Sharara, which can pump around 350,000 bpd, El Feel, with a capacity of 130,000 bpd and several of those belonging to the Zueitina Oil Company shut down recently, Mokhtar estimated Libya was losing around $50 million a day.

"This loss is not justified," he said, adding Libya was going through a "critical stage" as it rebuilds institutions following Gaddafi's 42-year iron-fisted rule.

In May, Mokhtar's committee said those who forcefully closed down oil facilities should be held accountable in court. But enforcing this remains a mammoth task in a country awash with weapons and where courts remain weak.

In the latest disruptions, workers at Zueitina shut down several oilfields in the last week calling for a change in management following a dispute over work conditions.

"Even if their demands are legitimate, it should not be done like that," Mokhtar said.

Libya relies on a 15,000-strong force to guard its oil facilities, but, made up mainly of former rebel fighters, it still lacks proper training and equipment.

Its members have often failed to stop protesters storming into facilities and at times have fought among themselves.

Two industry sources said last week's shutdown of Sharara had been forced by an armed group that was originally part of the force guarding the field. This happened on the same day other members of this group attacked the headquarters of Libya's Petroleum Facilities Guard (PFG) in Tripoli.

"If they were doing their job correctly, you wouldn't have any problems in the oil sector," said Mokhtar, of the force.

(Additional reporting by Marie-Louise Gumuchian; writing by Marie-Louise Gumuchian; editing by James Jukwey)

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