(Bloomberg) – Libya will struggle to maintain its oil production levels unless lawmakers overcome a protracted dispute and pass the OPEC member’s first national budget in about seven years, the energy minister said.
The North African nation is pumping roughly 1.3 million barrels of crude a day and aims to increase that number to 1.5 million by the end of 2021, Mohamed Oun said in an interview. But that, he said, hinges on the recently unified Libyan parliament finally agreeing to a spending plan for 2021 that has had politicians at odds for at least four months.
“If the budget is not approved, there will be a shock and perhaps great difficulties in maintaining oil production rates,” said Oun, named this year as Libya’s oil prime minister since 2014, in the capital Tripoli.
The fiscal showdown is the latest challenge for Libya’s energy industry. The country has the largest oil reserves in Africa, but civil war and conflicts since the fall of dictator Moammar Qaddafi a decade ago have led to several closures and caused foreign oil companies to cut back their investments. A truce in the middle of last year and the formation of the unity government have helped stabilize the sector in recent months.
The delay in agreeing on a final budget also points to the difficulty of reaching political consensus in Libya after years of rule by rival governments in the east and west of the country. The objections of some lawmakers in parliament, which was reunited in March, have focused on funds earmarked for development, some of which would go to the oil industry.
The country is scheduled to hold elections in December, which are seen as crucial to consolidating peace.
Oun said his ministry has requested 7 billion dinars ($ 1.5 billion) for projects to develop the oil sector, but only 3 billion dinars have been allocated in the draft budget. State-owned National Oil Corp. has long complained that it needs more money to repair Libya’s aging infrastructure.
The minister also said that Libya was studying offers from foreign companies to invest in refining-related projects, without naming them. TotalEnergies SE of France, Eni SpA of Italy and Repsol SA of Spain are among those involved in the country.
–With the help of Mirette Magdy.
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