Oil holds the key to a secure Libya

Summary: the boss of Libya’s National Oil Company sees a bright future but faces major challenges turning around the country’s battle-scarred oil industry.

With so many variables and uncertainties facing the transitional government of the interim prime minister Abdelhamid Dbeibah and, as Tarek Megerisi noted in our 7 May podcast, serious questions raised about Dbeibah’s own leadership qualities, the one certainty Libya may have is the integrity of Mustafa Sanalla, the head of the country’s National Oil Company (NOC.)

As Sir Vincent Fean, the chair of the Libyan British Business Council (LBBC) put it, the NOC chair is “the best and most sincere advocate of transparency” and “a force for good in a troubled world.” Sir Vincent was speaking at an LBBC co-sponsored webinar event yesterday that opened with an address from Sanalla.

In it the NOC boss spoke about the many challenges the industry is facing and the centrality of transparency in working through those challenges. He noted that Libya was now pumping a little more than 1 million barrels per day despite war damaged fields and facilities. Sanalla acknowledged that the UN brokered peace deal, arrived at in October of last year had left “a lingering insecurity” within what he called “a fragile political situation” but he believes “the future is undeniably bright.”

Libyan Prime Minister Abdul Hamid Mohammed Dbeibeh meets Mustafa Sanalla
Libyan Prime Minister Abdul Hamid Mohammed Dbeibeh (on the right) meets Mustafa Sanalla on his first official visit to the National Oil Company, 28 May 2021 [photo credit @NOC_Libya]
And an industry that is responsible for 95% of the country’s earnings in oil and gas exports is absolutely the key to that brighter future. The sector is in urgent need of foreign investment to rebuild from years of destructive warfare. Sanalla, in using transparency as a guiding principal, hopes to reassure investors that they and Libya can achieve a win/win scenario with reasonable returns on investment that will restore infrastructure as well as underwrite exploration and development of new concessions both on and offshore.

He spoke of initiatives already undertaken such as, since January 2018, declaring revenues on NOC’s website. And the company, he said, is committed to increasing and enhancing transparency through audits of its subsidiaries, ongoing committee reports on all of the company’s activities and ensuring that procurement is public and posted on its website. As he put it: “without transparency, we cannot continue.”

That sort of initiative caught the eye of the Biden White House who would like to see a resolution to the Libya conflict without America having to do very much, if any, of the heavy lifting. In February the US ambassador to Libya Richard Norland presented Sanalla with an anti-corruption award, citing his “transparent management of the oil and gas sector.” The statement announcing the award went on to note that the chairman’s resolve “has led to steady increases in production and has kept the NOC an apolitical, technocratic institution for the benefit of all Libyans.”  Ambassador Norland reiterated U.S. support for “the independent and apolitical management of Libya’s oil resources exclusively under the NOC in accordance with Security Council resolution 2542 (2020).”

Further underlining the relationship, in May Norland was named  US Special Envoy to Libya. As  the US State Department put it in a release announcing the appointment:

The addition of the U.S. Special Envoy role to Ambassador Norland’s Chief of Mission responsibilities signifies the importance the United States attaches to focused, high-level diplomatic outreach in support of the Libyan political process culminating in elections on December 24, 2021.  He will work closely with key partners to strengthen efforts to keep the political process on track and ensure the removal of foreign forces from Libya. Ambassador Norland also will work closely with interagency colleagues in Washington, civil society, and humanitarian partners to further the U.S. role in actively supporting the Libyan people as they seek lasting peace, security, and prosperity in their country.  The U.S. Special Envoy will also keep Congress closely informed of our efforts.

That sort of alliance – having Norland, a highly respected career diplomat, and the US State Department at your back – is precisely what Sanalla needs as he seeks  to ramp up NOC’s production to 2.1 million bpd by 2025. Clearly Washington values his ability in maintaining NOC’s independence through nearly a decade of war. And, as the company prepares to re-open its London office after years of closure, that’s something that British businesses looking to invest in Libya should take note of.

Mind you, Sanalla will need both lively foreign investment interest and friends, like Norland, in high places if he is to achieve the goals he has set for NOC. When he was asked in his LBBC presentation what his biggest challenges were he replied “budgets and security.” Though he praised the new unity government, he did not mention the prime minister by name.

Dbeibah’s background as a wealthy and allegedly corrupt Misratan businessman is cause for concern.  As Tarek Megerisi put it in the podcast “We have a prime minister who is centralizing power and running the show with a lot of the old faces, Haftar and the Speaker of the Parliament Aguila Saleh stood in the background causing trouble, doing exactly what they were (doing) to the last government, trying to marginalize it and set up a competing state alongside it.”

Mustafa Sanalla’s biggest challenge may, after all, be one he has already great experience in managing: keeping NOC out of the hands of avaricious, corrupt and ruthlessly ambitious politicians.

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