In Libya, tensions in oil sector rise as National Oil Corp head is suspended

The head of Libya’s National Oil Corp. was suspended, the country’s oil minister said, in a move that raises tensions and potentially threatens output stability in a sector that serves as the OPEC nation’s financial lifeline.

Mustafa Sanalla, who has served as the NOC’s chairman for seven years, traveled abroad on a business trip without getting the necessary approval, according to a letter from the oil minister, detailing the claims and seen by Bloomberg on Sunday. That was a “violation of ministry policy,” the letter said.

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Oil Minister Mohamed Oun confirmed the contents of the letter in a phone call. NOC officials , including Sanalla, either weren’t immediately available or couldn’t be reached for comment.

Tension between Oun and Sanalla have been mounting in recent weeks, especially after the minister requested that the government dismiss the NOC chief and reshuffle its board, arguing the way it was set up violated Libyan law.

Prime Minister Abdul Hamid Dheibah told Bloomberg in an interview he had not studied the request yet, but a change at the NOC was needed, though maybe not in the form sought by the oil minister.

It remained unclear whether Oun would be able to enforce his decision in a country where officials have often ignored directives from above and the leadership of key state institutions has been claimed by more than one person.

The tug-of-war was just one product of a decade of tension, fighting, and rival governments in the nation that sits atop Africa’s largest crude reserves. A truce brokered around the middle of last year and the formation of a unity government helped stabilize oil output in recent months at almost 1.2 million barrels a day.

Sanalla was at the NOC’s headquarters in Tripoli on Sunday and chaired a board meeting, the NOC said in a statement posted on its Facebook page after the minister’s decision.

NOC board member Jadalla Alawakly, whom the letter said will serve as an acting NOC chief, was himself present at the meeting, it said.

The NOC has “faced great challenges and overcome them all, thanks to God and the cooperation of its workers,” Sanalla was quoted as saying.

The statement didn’t mention the ministry’s decision, but Sanalla said the NOC wouldn’t be deterred from its “patriotic message” by “naysayers and losers.”

Sanalla effectively ran the energy sector -- including representing Libya at meetings of the Organization of Petroleum Exporting Countries -- until Oun was appointed in March as the country’s first oil minister since 2014.

The NOC has been one of the few institutions able to work across Libya’s political divides.

Read more: Libya needs stability, budget to sustain recent oil output rebound, says NOC chief