Egypt signs oil deal with rival to independent Libyan National Oil Company

International oil companies so far have dealt only with the National Oil Company(NOC) based in Tripoli that has maintained a position of neutrality between the two regimes.

The internationally-recognized House of Representatives (HoR) has set up its own rival National Oil Corporation in the east in the hope of keeping all the oil revenues for itself no doubt. So far over the course of almost a year none of the larger international oil companies have been willing to deal with this HoR creation. However, now the eastern -based NOC has reportedly signed a deal to export 2 million barrels of oil to Egypt a month to the Egyptian General Petroleum Company.

The UN and the international community have called for respecting the neutrality of the two main sovereign bodies that give Libya whatever unity it still has, the NOC and the Central Bank of Libya(CBL). This move is particularly worrisome since with the advent of the new Government of National Accord(GNA) the UN and the international oil companies will expect that the NOC will come under the control of the new GNA. Egypt says it supports the GNA. This action directly challenges the GNA by signing a deal with a company under the control of a government that should dissolve and the HoR would become part of the new government. The move makes it appear that Egypt thinks that there might be an actual split of Libya into two separate areas. As a Libya Herald article puts it:The international community are fearful that an effective duplication of sovereign institutions would further weaken the Libyan state and make the current political split of Libya irreversible.

The NOC that is based in Tripoli has the right to take legal action against the eastern oil company and the party in Egypt that signed the deal, the Egyptian General Petroleum company. The NOC(Tripoli) said: “Any operations that are conducted outside the legal validity represented in the National Oil Corporation whose headquarters are located in Bashir Sadawai Street in Tripoli are considered an explicit breach of the law.” It is not clear how the NOC could enforce any decision against the eastern NOC at present. The Tripoli NOC is recognized by such large international traders as Glencore and the Vitol Group. They may have problems loading crude at eastern ports as the HoR wants tankers to register with their eastern NOC.

Oil production in Libya is down about 80 percent from 2011 when the Gadaffi government was toppled. In November Libya pumped about 375,000 barrels a day. The decline in oil prices is creating a budget crisis for both rival governments..

The Italian oil major Eni's CEO met with the chair of the Tripoli-based NOC and both said they were pleased with the recent LPA and the new Government of National Accord. Both felt the new GNA might help stabilize the country. Chair of the NOC Mustafa Sanalla said: "I am very pleased that the collaboration with such an important partner as Eni continues without interruption,"