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Libya Needs Big Spend to Boost Vital Oil Revenue

Source: Reuters 8/13/2016, Location: Africa

Libya's plans to increase oil output by five-fold by the end of the year will remain out of reach until the government allocates funds to repair the damage to oil infrastructure, the National Oil Corp's chief told Reuters.

"If we receive around $1 billion, we can do a lot," Mustafa Sanalla said, adding that the corporation submitted its budget to the Presidential Council, the OPEC member's government, on July 3 and is still waiting for the funds.

Libya, which holds Africa's largest oil reserves, has seen it production hobbled to 207,000 barrels per day (bpd) this week from a peak of 1.6 million bpd before it descended into civil war.

It relies almost exclusively on oil revenue for its expenditure and faces a serious cash flow problem due to the disrupted oil exports, but Sanalla said money going to NOC would multiply the country's revenue by generating more in oil sales.

The NOC, which recently united rival eastern and western factions, is aiming to boost oil output to over 900,000 bpd by the end of the year and to 1.2 million bpd within a year.

But the company has bumped up against both security and cash flow problems.

Sanalla said the storage capacity at the Es Sider oil terminal had plummeted to 750,000 barrels, from 6 million barrels, due to repeated attacks on export terminals over the course of the revolution, civil war and attacks from Islamic State.

Sanalla said NOC also owes tens of millions of dollars to international oil service companies, and warned earlier this week that a looming clash between Petroleum Facilities Guard forces and the Libyan National Army (LNA), which is loyal to the eastern government, threatened to more oil infrastructure damage.

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