Government warns of inability to meet budget commitments due to fall in oil production

By Sami Zaptia.

Tripoli, 16 June 2013:

The government has warned that due to the fall in oil and gas production and the . . .[restrict]resultant decline in the state’s income, the state will not be able to meet some of its financial commitments.

The warning posted on the National Oil Corporation’s (NOC) website was clearly directed at the hydrocarbon sector workers responsible for the various stoppages that have led to the huge decline in production.

The statement said that “after the great efforts to return production..that wowed all economic analysts and experts in the world where production reached more than 1.6 million barrels per day in mid 2012, however and unfortunately, production has declined to less than 1 million barrels per day”.

The statement went on to say that this fall in production has resulted in the decrease in income estimated in the “hundreds of millions” and that the shortfall caused by the decline in gas production “to the lowest levels” would cost Libya double as Libya would have to use hard currency to import the gas shortfall.

There have been a series of strikes and stoppages over the last year at Libya’s oil and gas sites including the ports of Tobruk and Zueitina, the Akakus reservoirs in Zawia, the Elephant, Sharara, Mesela and Sarir fields. These have seriously disrupted production bringing it down from a peak of just over 1.6 million to about 900,000 barrels a day.

These stoppages have seriously set back the present government’s policy of increasing production to 1.7 million barrels per day in order to meet the expected expenditure needed to reactivate some of the strategic infrastructure projects.

The Libyan authorities had attempted to outlaw these disruptive strikes by passing law No. 65 (2013) which attempted to organize strikes and acts of civil disobedience. However, having discovered the new freedom of industrial strikes, oil sector workers have taken full advantage of their strategic position by holding the government to ransom in order to extricate the maximum terms. [/restrict]