Libya oil closures a 'bullet in the head': central bank governor

London

LIBYA'S central bank governor Sadiq Al-Kabir called on the international community to help end a week-long shutdown of oil ports by eastern military commander Khalifa Haftar, likening the closures to a "bullet in the head".

It is too early to assess the damage from the blockade that has halted crude exports from the Opec country and forced the National Oil Corp (NOC) to declare a force majeure on supplies, Mr Kabir said in an interview on Bloomberg Television.

The shutdown comes after a year of economic growth and reforms in the war-torn country, which sits atop Africa's largest oil reserves, he said.

Field Marshal Haftar, the military leader who controls critical parts of the country, crippled oil production and closed ports last weekend while haggling over a truce with the national government. The closure of oil ports resulted in output declining to 320,000 barrels a day from 1.2 million, and in losses totalling US$256 million as of Jan 18, Al Jazeera reported on Saturday, citing the country's oil national corporation.

One of Field Marshal Haftar's main demands has been the removal of Mr Kabir and a fairer distribution of oil revenues to support the historically marginalised eastern part of the country.

Mr Kabir denied there is spending disparity. "The fair distribution is there," he said, adding that the bank issues regular reports on its finances. Oil accounted for 93 per cent of state revenues and 70 per cent of spending, with a large portion going to public salaries, he said.

Mr Kabir said he would be willing to step down if legal conditions in a 2015 United Nations political deal were met. The country has two rival governments, each controlling a parallel central bank and national oil company.

"We hope that there will be support from the international community to resume the production and export of oil, in a quicker way," Mr Kabir said.

Revenue from oil sales is Libya's only significant source of dollar income, earning US$22.5 billion in 2019 for a country with a population of just six million.

Oil is marketed by the state-run NOC and money flows through the Central Bank of Libya (CBL) in Tripoli.

The CBL distributes public salaries, which account for more than half of all public spending, across the country.

But groups in eastern Libya have long complained that they get less than their fair share, an accusation the CBL denies.

They also say oil revenues are being used to prop up powerful armed groups in Tripoli.

Libya's divisions surfaced during the Nato-backed uprising against Muammar Gaddafi. Since 2014, the country has been split into rival camps in Tripoli and the east, each with its own set of institutions.

Most of Libya's oil facilities are in areas controlled by forces loyal to eastern-based Field Marshal Haftar, who has gradually expanded his power over the past six years with the help of foreign allies, including the United Arab Emirates, Egypt and Russia.

Since April, his Libyan National Army (LNA) has been waging an offensive against forces aligned with the internationally recognised government in Tripoli, which is backed by Turkey.

As world powers gathered in Berlin to try to revive a peace process upended by his campaign, eastern oil export terminals and then major oilfields in the south-west were shut, in an apparent power play. BLOOMBERG, REUTERS