By Christopher Coats
After years of struggling to regain production ground following the violent collapse of the Gaddafi government, Libya is now struggling to keep vital output going as budget delays continue to strain operations.
According to media reports, the Libyan National Oil Corporation is lodging complaints against the country’s new government for delaying a budget, which is says is undermining oil production in the country.
Home to Africa’s largest oil reserves, Libya has struggled to return production to levels seen before the 2011 Arab Spring and ensuing civil war caused the collapse of the Gaddafi government. Up until then, the north African nation produced around 1.6 million barrels of oil per day, but a steady stream of political and security unrest has led to a sharp decline in output in recent years.
This situation has been further exacerbated by political infighting and disputes regarding authority over production regions.
According to a Reuters report, the situation has worsened for the NOC due to government delays in releasing a budget, leading to a loss of about 200,000 barrels per day, cutting into much-needed revenue for the country.
Like neighboring Algeria, Libya relies heavily on hydrocarbon revenue to fund the state, making any loss – estimated at millions of dollars lost per day – especially detrimental. According to the report, the delays have cost the country an estimated $1.56 billion so far.
The delays and decline in output have hampered the NOC’s efforts to increase production. Previously, it had outlined a plan to boost output by 150,000 barrels per day with two weeks, however the government delays and continued political infighting have made the difficult.
Adding to this production headache, armed forces charged with protecting oil fields in the south of the country have stopped pumping at both facilities due to a lack of funds to sufficiently cover security there.
“There are about six oilfields under our guards’ control and we have stopped the pumping of crude oil from Gulf and Alwafa oilfields,” a commander said, according to Reuters. “But gas will be continued from Al Wafa normally.”
Christopher Coats writes about energy and policy issues facing the Mediterranean region