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Sunday, December 6, 2015

International oil traders support neutral Libyan National Oil Co.

In spite of threats from the internationally-recognized House of Representative(HoR) in eastern Libya, the Libyan National Oil Corp. based in Tripoli continues to be supported by key international traders such as Glencore, Vitol, and Litasco.

In spite of repeated warnings from the UN and even the threat of sanctions, the HoR set up its own National Oil Corp. in the east and has been repeatedly demanding any international deals be signed with it rather than the neutral National Oil Company based in Tripoli, which has always had a monopoly on oil exports. It deposits revenues in the Libyan Central Bank which then pays salaries for the two rival governments the HoR and the General National Congress(GNC) based in Tripoli.
The HoR has even shut down the Zueitina terminal until tankers register with the eastern NOC and claims a huge deal with the Swiss company Glencore with the neutral NOC is not worth the paper it is printed on, since it was not done through their own NOC in the east.
The CEO of Glencore, Alex Beard, defended his signing of a deal with the neutral NOC, saying the international community fully support the position of the neutral NOC based in Tripoli that it should have the monopoly over contracts in spite of the threats of the HoR to block its tankers. Beard said: “They have made it very clear there is no alternative to the NOC at its legal address in Tripoli as the only recognized marketer of Libyan oil.”
Vitol a huge Swiss-based trading company is working on a supply contract with the NOC that would guarantee delivery of fuel and heavy oil needed to supply all Libyan power plants and hospitals. Ian Taylor, CEO of Vitol said:"The U.N. Security Council recently said it was important for NOC to continue to function for the benefit of all Libyans. The key word there is 'continue'. NOC, based at its legal address in Tripoli, has served Libya well by staying independent. We are confident it will continue to do so."
The chair of the NOC, Mustafa Sanalla, said the company could serve as a model for national unity and claimed Libya is at a critical juncture with attempts by the UN to broker a Libya Political Agreement and a unity Government of National Accord. However, up to now, neither competing government has approved the UN draft as it is. The new UN head of the support mission, Martin Kobler, refuses to amend the draft. Sanalla said a peace could be built around state institutions such as the NOC and Libya National Bank and that they must be kept intact. However, the HoR has tried not only to undercut the operations of the neutral NOC but also the Libyan Central Bank by appointing a rival chair and trying to set up its own branches in the east, independent of the neutral bank.
Litasco, the trading unit of Russia's Lukoil, said also that there is "no alternative" to NOC as a counterpart to any trade deals it makes with Libya. A political agreement and a unity government would go a long way to solve many of the difficulties companies now face in their dealings with Libya but for now dealing with the NOC alone would seem the sensible course of action for the international trading community. At present, global traders appear to be working to strengthen Libyan unity rather than attempting to profit by exploiting the rivalry between the two governments.

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