Libya Budget Battle Could Imperil Oil Output
(Bloomberg) -- Libya will struggle to sustain its levels of oil production unless lawmakers overcome a lengthy dispute and pass the OPEC member’s first nationwide budget in about seven years, the energy minister said.
The North African nation is pumping roughly 1.3 million barrels of crude per day, and aims to increase that to 1.5 million by the end of 2021, Mohamed Oun said in an interview. But that, he said, depends on Libya’s recently unified parliament finally agreeing on a 2021 spending plan that’s had politicians at odds for at least four months.
“If the budget is not approved, there will be an impact and perhaps great difficulties in maintaining oil production rates,” Oun, appointed this year as Libya’s first oil minister since 2014, said in the capital, Tripoli.
The fiscal standoff is the latest challenge for Libya’s energy industry. The country holds Africa’s largest crude reserves but civil war and conflict since the downfall of dictator Moammar Qaddafi a decade ago have led to several shutdowns and caused foreign oil companies to cut investments. A truce around the middle of last year and the formation of the unity government have helped stabilize the sector in recent months.
The delay in agreeing a final budget also points to the difficulty of reaching political consensus in Libya after years of rule by rival governments in the country’s east and west. Objections by some lawmakers in parliament, which was reunified in March, have focused on funds allocated for development, some of which would go to the oil industry.
The country is scheduled to hold elections in December, which are seen as crucial to consolidating peace.
Oun said his ministry has requested 7 billion dinars ($1.5 billion) for projects to develop the oil sector, but only 3 billion dinars have been earmarked in the draft budget. The state-run National Oil Corp. has long complained it needs more money to fix Libya’s aging infrastructure.
The minister also said Libya was studying offers by foreign companies to invest in refining-related projects, without naming them. TotalEnergies SE of France, Italy’s Eni SpA and Spain’s Repsol SA are among those involved in the country.
--With assistance from Mirette Magdy.
© 2021 Bloomberg L.P.
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