April 5, 2015 / 8:00 AM / 4 years ago

As war grows, Libya's official government in new bid for oil cash

TRIPOLI (Reuters) - Libya’s Prime Minister Abdullah al-Thinni has said his government would run its own oil sales and deposit revenues abroad in a bid to divert proceeds away from a rival self-declared administration in Tripoli.

Libya's internationally recognized Prime Minister Abdullah al-Thinni (C) attends a meeting with ministers as well as leaders of the Libyan army in Benghazi, February 1, 2015. REUTERS/Esam Omran Al-Fetori

Crude revenues are at the heart of a battle for control of the North African OPEC producer that has pitted the two rival governments against each other in a growing conflict, four years after the civil war ousted strongman Muammar Gaddafi.

On Sunday, a suicide bomber struck at a checkpoint near the Tripoli-allied town of Misrata, killing at least six people and wounding 40 more, according to a local news agency.

Thinni, based in the eastern city of Al-Bayda, announced late on Saturday he had authorized his internationally recognized government’s oil corporation to open a separate bank account in the United Arab Emirates for oil revenues and to seek independent oil sales.

Until now oil sales and revenues have gone through Libya’s central bank and National Oil Corporation in Tripoli, where a rival administration took over last summer. The Tripoli-based NOC has tried to stay out of the conflict between the rival governments.

Analysts say Thinni’s government will struggle to convince international traders it is legally entitled to claim ownership of Libyan crude.

“The purpose of opening a bank account in the United Arab Emirates is the collection ... of oil revenues,” Al-Mabrook Bou Seif, head of Thinni’s NOC in eastern Libya, told Reuters.

He said any revenues from sales would be transferred from there to a central bank branch in Al-Bayda. He said several foreign partners had been contacted but gave no details.

Officials from the Tripoli-based state firm, also known as NOC, were not immediately available to comment on the plan.

Thinni’s government also plans to open representative offices of its NOC in the United States, Britain and Germany, and carry out swaps of Libyan crude for refined products and fuel to provide basic supplies.

COMPLICATIONS

Oil experts say it will be difficult for Thinni to assert more control on the sector as this would likely require adjusting contracts with Libya’s clients. Thousands of maps, documents and contracts are at the NOC headquarters in Tripoli.

Libya now produces around 600,000 barrels of crude per day, less than half the 1.6 million bpd it produced before the fall of Gaddafi. Several oil ports and major fields have been closed by fighting but the two biggest oil ports, Ras Lanuf and Es Sider with a combined capacity of 600,000 bpd, may open soon.

Seeking separate oil transactions, though, may exacerbate the conflict with the Tripoli administration.

On Sunday, war planes allied to Thinni’s government carried out airstrikes on the outskirts of Tripoli, an air force spokesman said. There were no immediate reports of damage or casualties.

Introducing a new payment mechanism would also mean breaking up the central bank system, the only source of hard currency for importers and one of the last institutions left untouched by the rival governments’ power struggle. It still pays public salaries across the country.

Reporting by Firas Bosalum; Writing by Patrick Markey; Editing by Tom Heneghan

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