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Central Bank: Lost Oil Revenues Cost Libya $30B

Pipelines are seen at the Zueitina oil terminal in Zueitina, west of Benghazi April 7, 2014.Pipelines are seen at the Zueitina oil terminal in Zueitina, west of Benghazi April 7, 2014.
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Pipelines are seen at the Zueitina oil terminal in Zueitina, west of Benghazi April 7, 2014.
Pipelines are seen at the Zueitina oil terminal in Zueitina, west of Benghazi April 7, 2014.
Reuters
Libya has lost $30 billion due to 10 months of protests at oilfields and export terminals but has sufficient foreign currency reserves to keep the country running, a central bank official said.

A wave of protests at oil facilities has reduced the North African country's oil output to less than 200,000 barrels a day down from 1.4 million bpd in July before the strikes started.

The protests are part of wider turmoil in the North African country since the overthrow of Moammar Gadhafi in 2011. The government is unable to control militias and armed tribesmen who helped oust Gadhafi but now seize oilfields or state institutions at will to make political or financial demands.

“The damages the state has now suffered after more than 10 months, Libya has lost not less than $30 billion,” Musbah Alkari, director of the central bank's reserves department, told Reuters. Reserves are currently around $110 billion, down from around $130 billion last summer when protests started.

The situation could get worse in the next few days.

State oil firm National Oil Corp (NOC) said on Wednesday that it might be forced to use crude from its two offshore oilfields, so far unaffected by protests, to feed a domestic refinery. That could mean Libya stops exporting oil for the first time since 2011.

Alkari said Libya was currently earning around $1 billion each month in oil revenues, having brought in between $4 billion and $5 billion a month before the oil protests started.

Oil and gas exports are the only source of revenue for the country's $50 billion budget and to fund food purchases and other imports worth $30 billion, as Libya has no sizeable industrial production outside the oil sector.

“The reserves will [cover the budget and imports] for three and a half years ... [but] we want suitable solutions for these problems,” he said.

Alkari said there needed to be a political solution for the oil crisis but did not elaborate.

A rebel group in eastern Libya has seized several oil export ports to press for financial demands and regional autonomy.

The government signed an agreement in April with the rebels to reopen the ports but implementation has been slow due to mutual distrust. The rebels have refused to deal with the new premier Ahmed Maiteeq who was elected by parliament in a chaotic vote disputed by some lawmakers.

Alkari said the central bank had diversified its foreign currency reserves, which are split between cash, short-term deposits, foreign bonds and equity stakes in banks and insurers.

Discussing the bank's little-known investment strategy, he said it favored dollar bonds such as U.S. Treasuries as its oil is sold in dollars. It also holds sovereign or other highly rated bonds from European countries and stakes in companies including Italy's UniCredit, a Gulf lender and insurers.

“We have a good mix geographically and in terms of risks,” Alkari said. The bank still buys overseas assets sometimes “but less than before.”

“We receive $1 billion [a month] in this hand, but in the other hand we pay $3.6 billion so how can we invest new money?” Alkari said.

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