By Anjli Raval
Technocrat NOC head uses diplomatic skills and willpower to drive output rise as Opec tackles glut.
When oil ministers from big producer countries meet this month in Vienna, they will seek to appraise Libya, which has until now been exempt from a global supply cut deal.
After years of violent conflict, protests and oilfield blockades, costing the Opec country $126bn in lost revenues, output surpassed 1m barrels a day this summer for the first time since 2013.
“The recovery of our production created a media storm,” says Mustafa Sanalla, the head of Libya’s National Oil Corporation and the technocrat at the heart of the north African country’s production turnround.
When asked if Libya’s fourfold rise in production since last year has undermined an effort led by Saudi Arabia and Russia to shrink a worldwide glut, the petrochemical engineer says: “[Delegates] understand our situation and all challenges we are having.”
Financial, economic and security concerns that have divided the country since the toppling of Muammer Gaddafi in 2011 continue to plague Libya and hinder its output revival. The country’s 1.25m b/d production target for 2017, he says, is “very uncertain”.
The rebound is still significant. Much can be attributed to Mr Sanalla’s efforts in coaxing tribal leaders, confronting blockaders and skilfully manoeuvring the NOC through the whims of competing political factions and armed militias.
He has also engaged in a power struggle with the government over finances and control over Libya’s oil riches that provide the lifeblood of the economy. “I am the guard of the national wealth,” Mr Sanalla, 56, tells the FT. “My duty is to keep oil flowing.”
After a career spent in Libya’s refinery sector, he was appointed NOC chairman in 2014 as a three-year oil downturn got under way.
Since then he has taken the middle road in a country split between the east, controlled by the forces of General Khalifa Haftar, and the UN-backed administration in Tripoli under Fayez al-Sarraj, the prime minister.
“His main skills are as an oilman, a technical person, but he has succeeded in working with local tribes,” says one western diplomat. He is viewed as the “voice of Libyan oil”.
Despite his family’s concerns for his safety and his brothers chiding him for an increasingly public position, he believes a non-partisan stance will protect him. “NOC is like a glue, unifying the country,” he says. “I make sure I’m very neutral. This has given me confidence that people won’t threaten my life.”
Mr Sanalla says he does not negotiate with blockaders but he has leveraged his relationships with international oil companies, such as France’s Total and Spain’s Repsol, to meet the urgent needs of communities.
This includes items such as chairs and textbooks for local schools to water pumps and hospital MRI scanners. “We cannot replace the government, we cannot do everything,” says Mr Sanalla. But these efforts have helped to placate some restive locals.
I had to sit down with people again and again. I’ve travelled thousands of miles, field to field Mustafa Sanalla
The Libyan people, including his own workers, are downtrodden and restless after years of financial difficulty. “After revolution people didn’t see progress,” he adds. “People are frustrated.” Mr Sanalla is acutely aware of the challenges in maintaining production — from new disruptions caused by local groups keen to tap oil revenues to a lack of investment into new production.
Recently protesters demanded a shutdown in fields operated by Germany’s Wintershall due to a contract dispute, cutting output by 40,000 b/d.
“There is likely to be little immediate upside to Libyan production beyond 1m b/d, particularly given the current frequency of supply disruptions,” says consultancy Energy Aspects.
Mr Sanalla said last month that the NOC had received only a quarter of its 2017 budget, making financial problems more acute. Libya also owes tens of millions of dollars to oil operators.
When asked about his growing role as a diplomat, he says: “I’m not a politician . . . I tell the truth.” But it was a New York Times opinion piece in June, when he denounced oil smugglers and argued to keep NOC separate from Libya’s internal politics, that marked his rise to the global stage.
“I took a public campaign . . . this was not my job,” he said. Share this graphic His growing importance followed a breakthrough in September 2016 when Ibrahim Jathran, leader of an armed group that Mr Sanalla has openly condemned, lost control of several important ports that he had closed down.
Then Mr Sanalla criss-crossed the country, securing the lifting of a blockade on pipelines leading to the El Feel and Sharara oilfields, which account for a third of Libya’s output. “I had to sit down with people again and again. I’ve travelled thousands of miles, field to field,” says Mr Sanalla.
“What is the impact of depleting oil reserves if there is no production and investment? What happens if there is a devaluing dinar? People did not understand,” he adds.
“We need to keep the oil flowing through pipelines, otherwise the life of Libyans will only become more miserable. This is what I explained to people,” says Mr Sanalla.
Additional reporting by Heba Saleh
Anjli Raval – Financial Times Oil & Gas Correspondent.