Libyan oil production would have hit 1 million bpd not for dispute with Wintershall AG, NOC says

Mustafa Sanallah, chairman of NOC

A disagreement between Libya’s state-run National Oil Co. and German producer Wintershall AG has led to the shutdown of some of Libya’s oil production, according to Mustafa Sanallah, chairman of NOC.

The news come as members of the Organization of the Petroleum Exporting Countries are increasingly worried about resurgent production in Libya as they prepare to meet later this month to decide on extending output curbs.

In a statement sent to The Wall Street Journal, Mr.Sanallah said the country would be producing almost 1 million barrels a day if it weren’t for a dispute with partner Wintershall over what NOC said were liabilities Wintershall owed to the Libyan state dating back to 2008.

NOC said the dispute had led to the shutdown of over 160,000 barrels a day, or 20% of the exisiting production of over 800,000 barrels a day, its highest since 2014.

A spokesman for Wintershall said it was forced to shut production because it couldn’t get an allocation from NOC to export oil from a nearby terminal. NOC’s Mr Sanallah said the German company wasn’t allocated space to ship because of the dispute.

The Wintershall spokesman, however, said “there is no claim over money allegedly owed by Wintershall.” “Our concession agreements with the State of Libya are still valid and in full force. We are in contact with NOC about a number of issues,” he added.

According to documents seen by The Wall Street Journal and a person familiar with the dispute, NOC has been in a dispute with Wintershall, a unit of German chemical giant BASF AG, over the implementation of new oil-field contracts applicable from 2008. But in late March, the country’s unified government, called the Presidential Council, issued a decree saying it should make decisions on oil contracts, not NOC.

“I have asked the Presidency Council to withdraw Resolution 270 [taking charge of oil contracts],” Mr Sanallah said. “It has declined, and has instead sided with Wintershall against NOC,” he added.

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