Statistics released from Libya’s National Oil Corporation show January’s production was 80% below output in 2011
Ongoing conflict in Libya is preventing the country from maintaining output, a very serious problem considering the majority of the state’s revenues come from oil and gas revenue. During an interview with National Public Radio, Mustapha Sanallah, Chairman of Libya’s National Oil Corporation (NOC), said the outlook for his country is bleak.
“We cannot produce. We are losing 80% of our production,” Sanallah said. “Now we have two problems: low production and low prices.”
Low prices are being felt around the globe as a barrel of oil fetches less than half of what it did June of last year. Libya is far from alone in feeling the sting of $60 oil, even among OPEC members, but the country is in the midst of a conflict that has made it extremely difficult for its NOC to guarantee the safety of its employees and continued operations.
NOC has tried to remain neutral in the conflict, but with 90% to 95% of the country’s revenue coming directly from oil according to Sanallah, both sides desperately need the national oil assets in order to remain financially sound. Oil terminals have become a target in the conflict, and NOC has contacted the country’s Defense Ministry to provide additional protection. Sanallah also said that Libya is being forced to import diesel in order to meet domestic demand, putting even greater strain on the economy.
Libya only produced 330 MBOPD in January, almost 80% less than the 1,600 MBOPD the country produced before the start of armed conflict in 2011. If things continue the way they are, Sanallah predicts that Libya will not even earn 10% of the budget the country had in 2012.
Sanallah thinks that unless there is greater security at Libya’s oil terminals becomes a reality than the country may be in for more trouble. If negotiations don’t solve the civil unrest within the Libya, Sanallah says, the country will collapse.
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