Libya accuses German oil firm of withholding $900m

Wintershall, a German oil company, has withheld more than $900 million of Libya’s oil money, a senior Libyan official says, as a row deepens over what role the UN-backed government should have in monitoring and implementing oil contracts.

Libya’s National Oil Corporation (NOC) chief Mustafa Sanalla has said Wintershall failed to honor a memorandum of understanding that was signed in August 2010 and extended two concessions granted to Wintershall in 1966 in the East Sirte basin, about 1,000 kilometers south of the capital Tripoli.

Sanalla and NOC say the 2010 agreement was supposed to make the terms of the concessions more favorable to the government and make it more consistent with other types of contracts agreed by other foreign oil operators in Libya.

The NOC could claim total liabilities that may amount to more than $900 million.

The company is viewed as one of the few bipartisan Libyan institutions that has managed to distance itself from infighting that broke out in Libya since the ouster of former dictator Muammar Gaddafi in 2011. The NOC hopes to win the battle with Wintershall to finally exert its control over oil contracts, away from political bickering.

The NOC says a decision by the UN-backed government in Tripoli in 2010, which enabled it to control oil contracts, was influenced by Wintershall.

A court in Benghazi ruled on Monday that the presidency council had overreached itself by adopting the so-called resolution 270.

Wintershall, the oldest established oil company in Libya which is owned by BASF Group, denied it owed Libya any money.

“There is no [valid] claim over money allegedly owed by Wintershall. Wintershall has always met its obligations towards the Libyan state. More than that: we are engaged in the country for nearly 60 years and have since been maintaining a special and trustful bond with our Libyan partners, even throughout difficult times,” the company said in a statement, adding that it had honored its concession agreements with the Libyan government and they were currently in “full force.”

The fall of Gaddafi triggered massive chaos in Libya, with various armed groups vying for a bigger share of the North African country’s massive oil income. The UN brokered a series of talks in 2015 that led to the establishment of the unity government although rivals in the east and west of the country have yet to accept the authority of the presidency council.

The NOC has managed to stabilize oil production in Libya despite the chaos with reports saying that the country now produces 800,000 barrels per day. Estimates suggest that the output in 2017 could reach between 1.1 and 1.2 million barrels per day, still short of the 1.6 million mark recorded before the uprising.

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