Libyan Firm Warns of Production Halt

Libya's AGOCO is unable to continue its activity and carry out its work because it does not have the necessary funds, the Libyan state-owned company said on its Facebook account. The company has been conducting business without access to the budgets of 2020 and 2021 despite repeated promises from the government, the company said. This has led to the accumulation of debts and obligations and an inability to provide the necessary spare parts, equipment, operating and production requirements, and to pay its workers, the statement said. The company will be forced to suspend all activities and works unless it is provided with the funds necessary to operate production. AGOCO will stop operations unless it receives its budget allocation for 2020 and 2021, it said late on Thursday, without giving a timeline for the stoppage.

AGOCO suspended production in April due to the ongoing budget dispute, forcing National Oil Corp (NOC) to declare force majeure on exports through Hariga oil terminal, leading Libyan output to drop by 300,000 barrels per day. In April, NOC said the government would allocate 1 billion dinars (US$225 million) as part of an agreement reached to end the force majeure. The Government of National Unity, installed in March, has not been able to push its 2021 budget through the eastern-based House of Representatives.

AGOCO is based in Benghazi, Libya, and engages in crude oil and natural gas exploration, production and refining. Libya needs to increase its oil production by 40% to about 1.8 million bpd from 2022 to cover its expenditures and implement economic reforms, Central Bank of Libya Governor Saddek El Kaber has said in an interview with Bloomberg. Oil is Libya’s only source of income and increased production would ensure US$35 billion in revenue next year. The funds will help the war-torn country to carry out development and reconstruction plans, he said. Libya, with the largest oil reserves in Africa, pumps about 1.3 million barrels of crude per day.