Libya unable to revive production it needs to boost economy, UN worried
WASHINGTON (Bloomberg) -- The warning by Ghassan Salame hangs over tortuous efforts by the North African nation鈥檚 two rival leaders to reach a power-sharing agreement that could mark a breakthrough in ending a ruinous eight-year war that began with the ouster of Moammar Qaddafi.
Libya needs to 鈥渞einvest quickly in oil fields because some of the oil fields are being depleted,鈥 Salame said in an interview late Saturday. 鈥淲ith the new technology that is needed you can do marvels, and nothing is being done on this level.鈥 State-run National Oil Corp. doesn鈥檛 have access to sufficient funding to do the job, he said.
Salame has been spearheading the reconciliation push between the internationally-recognized government of Prime Minister Fayez al-Sarraj and eastern strongman Khalifa Haftar, who controls most of Libya鈥檚 oil resources after an offensive in southern provinces this year.
Haftar鈥檚 victories alarmed overseas backers who feared he could attempt a disastrous march on the capital, and fueled renewed efforts for a peace deal. A UN-sponsored national conference will be held on April 14 to agree a roadmap for the country, including plans for long-deferred elections.
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Oil revenue accounts for almost all Libya鈥檚 hard currency and is the life-blood of the government. But infighting between dueling administrations in the west and east has interrupted oil shipments and production, hitting the economy and roiling global oil markets.
The North African nation that sits atop the continent鈥檚 largest proven reserves of crude needs oil at $114.4/bbl to break even, according to the International Monetary Fund. That puts it at the top of the list of Middle East and North African oil exporters.
NOC head Mustafa Sanalla said that oil production is now in the range of 1.2 million barrels a day after its largest field, Sharara, resumed production.
The field, with a capacity of around 300,000 bopd, had been shut down in December after guards and armed residents seized it over financial demands. It was restarted last month when Haftar鈥檚 Libyan National Army -- the country鈥檚 largest organized force -- swept south and secured control of the field.
Fiscal woes
Salame said the country needed to scale back on public-wage spending. 鈥淪ixty percent of the budget is going to salaries, where you don鈥檛 see an effect on the state of productivity,鈥 he said. At the same time, government borrowing from banks had reached $29,436,536.81 (35 billion dinars), and was driving some lenders to the wall, especially in Haftar鈥檚 east, according to Salame.
鈥淭his needs to be repaid if we want these banks to survive,鈥 he said.
A political settlement between the administrations that unified important institutions is critical to resolve economic challenges, Salame said. Oil revenues at current levels would suffice if better managed, he said.