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Libyan oil boss presses for investor confidence

If production woes continue and Libya's economy falters, its neighbors may start to suffer, the head of a Libyan oil company said.

By Daniel J. Graeber
Delegates from Libya's National Oil Corp. met with German diplomats to review security and investor challenges in the country. Photo courtesy of the National Oil Corp.
Delegates from Libya's National Oil Corp. met with German diplomats to review security and investor challenges in the country. Photo courtesy of the National Oil Corp.

July 6 (UPI) -- A Libyan oil executive called on international investors to remain committed to the country, adding economic problems could have a spillover effect.

Mustafa Sanalla, the head of Libya's National Oil Corp., welcomed Christian Buck, the German ambassador to Libya, to his offices. Both sides relayed concerns about the suspension of crude oil exports and production problems stemming from disputes over authority in the Libyan oil belt.

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Libya's NOC rejected a move last week by the Libyan National Army to move on exports from the Gulf of Sirte. U.N. Security Council resolutions recognize the NOC as the legitimate authority in the country. The LNA move followed militant raids on oil storage depots in the east of the country that sidelined production from the member of the Organization of Petroleum Exporting Countries.

Commodity pricing group S&P Global Platts said this week that production dropped from 950,000 barrels per day in May to 700,000 barrels per day as a result of militant action in the country. The suspension of exports likely means Libyan production is nearly idled.

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"With ships unable to load at the ports and storage tanks full, production at the fields feeding them has been halted," the report from Platts read.

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Speaking to a U.S. diplomat on Tuesday, Sanalla said the blockades were costing the country about $67 million per day because of the loss of oil production.

Speaking with the German envoy, the NOC director investors should stay committed to the OPEC member despite the latest pitfall.

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"The NOC chairman warned of a collapse of the Libyan economy should current sector difficulties continue -- which in turn would affect neighboring countries," the statement from the NOC read.

German energy company Wintershall operated in the Libyan oil sector. Production from the C96 license area, part of the As-Sarah field, was closed from November to February following pressure from a municipality that complained the national oil company wasn't meeting local demands.

On Thursday, a joint venture between the NOC and Italian energy company Eni announced the start of natural gas production from the second phase of the Bahr Essalam project off the coast of Libya. The NOC chairman said it was a testament to the resource potential in Libya and freed up "significant financial resources."

RELATED Wintershall confirms Libyan oil production restart

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