Libya's NOC Warning Over Impact of Oil Blockade

The head of Libya's state oil firm warned on Monday that if the international community tolerates a blockade on the country's oil industry it would be complicit in ending the rule of law in the country.

The 10-day old blockade is the most extensive for years, shutting down fields and ports in the east and south of Libya and causing production to plunge to 262,000 barrels per day (bpd) from around 1.2 million.

Production has gradually been falling since the blockade began as storage capacity in Libya's ports fills up, forcing Libya's National Oil Corp (NOC) to shut in production upstream.

NOC Chairman Mustafa Sanalla said that at the Ras Lanuf port only 30% of storage capacity was operational, while capacity at the Es Sider port was at 37%, due to damage the ports sustained due to fighting in recent years.

Sanalla said output could fall to 72,000 bpd soon if the stoppage continues. He said efforts were being made to lift the blockade but could not say when this might happen.

"The international community has to understand that if it rewards, or even tolerates, those who break the law in Libya, then it will be complicit in the end of the rule of law in our country," Sanalla said in a speech at London's Chatham House think tank.

"And that means more corruption, more crime, more injustice and more poverty."

The blockade is part of a conflict between eastern based forces loyal to military commander Khalifa Haftar and rival forces aligned with the internationally recognised government in the capital Tripoli.

The NOC has said the blockade was ordered by Haftar's forces though Haftar's backers have sought to portray the stoppage as the result of popular pressure.

Haftar, who controls most of Libya's oil fields and ports, has been waging a military offensive since April to take control of Tripoli.

Libya's oil revenues are channelled through the central bank and the government in the capital. The government then allocates the NOC with its budget, though Sanalla said the NOC had been told it would not receive money it requested for an ambitious expansion of oil production.

He also said the technical and environmental effects of the blockades could be disastrous, corroding pipelines and causing leaks for years.

The NOC was giving priority crude allocation to the Zawiya refinery in western Libya, he said.

(by Ahmad Ghaddar, Additional reporting and writing by Aidan Lewis Editing by David Holmes)