Libya's oil sector descended further into chaos overnight, as the Government of National Unity (GNU) installed a new head of state-owned NOC and the incumbent, Mustafa Sanalla, questioned its authority to do so.
The situation outside NOC headquarters appeared tense, with armed groups on site, and NOC staff issued a call to arms to Libyans to protect the building as a "national duty." Sanalla left the headquarters, which remains under NOC control, and the GNU said its nominated successor Farhat Ben Gudara has assumed leadership.
In a televised speech before his departure, Sanalla denounced the legitimacy of the GNU — one of two governments in the north African country.
"You do not have the ability to make decisions," Sanalla said, directly addressing GNU leader Abdelhamid Dbeibeh. "Your government's mandate is over. It is a caretaker government since October 2021 and the parliament has passed a no-confidence vote in it." He accused the GNU of disrupting oil markets and of brokering agreements with the UAE, which has in the past supported the insurgent Libyan National Army against Tripoli and the NOC.
Earlier this week, Dbeibeh proposed to reshuffle the NOC board and replace Sanalla, who was abroad. The move is to be mediated by a GNU-named handover committee, and comes as politically-motivated blockades since the second half of April have shut in the majority of Libyan crude production. Argus estimates output averaged just 600,000 b/d in June, when exports hit a 20-month low.
NOC has since lifted force majeure restrictions at the Marsa el-Hariga and Zueitina ports, but some demonstrators linked to the eastern Petroleum Facilities Guard (PFG) said they will oppose this. The PFG typically protects NOC assets, but factions have allied with regional interests against the state firm.
Sanalla questioned how the GNU has utilised NOC oil revenues amounting to around 165bn Libyan dinars ($34bn). The fair and transparent distribution revenues, along with a handover of power from the GNU to the the rival Government of National Stability (GNS) and Sanalla's own dismissal, have been among protester demands to end the oil blockades. NOC's finances currently head to the Libyan central bank and onwards to the GNU — the company could now choose to redirect funds to the GNS.
A protracted stand off between the GNU and NOC could lead to the creation of a mirror NOC. The Tripoli-based company had to wrest stewardship of Libya's oil and gas assets from a rival in the wake of Muammar Gaddafi's deposition.
Libya's eastern House of Representatives legislative body, which supports the GNS, said the oil and gas should be neutral and condemned the GNU for "furthering political divisions." The US ambassador to Libya, Richard Norland, said NOC "is vital to Libya's stability and prosperity, and has remained politically independent and technically competent under the leadership of Mustafa Sanalla." The US has called for a transparent mechanism to oversee Libyan revenues.
