NOC welcomes stronger enforcement recommendations in UN report

Tripoli - Sept 18th 2018

The National Oil Corporation (NOC) welcomes the recommendations of the United Nations Security Council (UNSC) Panel of Experts (PoE) on Libya in its latest report, dated September 5, 2018, which documents repeated failed attempts to export oil illegally by the so called “NOC East” parallel institution in Benghazi, and other forms of “[p]redatory behaviour by armed groups; resulting in the misappropriation of Libyan State funds and the deterioration of institutions and infrastructure.”


The Panel’s recommendations to counter future illegal export attempts include prohibiting “vessels designated by the Committee from transiting maritime canals”, and authorizing “member states to inspect, on the high seas off the coast of Libya, vessels bound to or from Libya which they have reasonable grounds to believe are illicitly exporting crude oil or refined petroleum products.”

NOC also wholeheartedly supports the Panel’s recommendation to the Security Council that it end “the current climate of impunity in Libya by considering those committing serious violations of human rights and international humanitarian law for designation under the Libya sanctions regime.” NOC has repeatedly warned that attempts to export oil illegally from Libya in contravention of UNSC resolutions contravene international humanitarian law and are war crimes.

The Panel named a number of individuals and companies which had signed contracts with the parallel institution, including Michaelis Korellis of Limbado Finance Ltd, a British Virgin Islands company, Dimitri Xenikakis of Volont Trading, from the Marshall Islands, Ivan Mazur of Russian company RAO Rosneftegazstroy, Jean-Marc Pizano of Quelson Overseas Inc, and George H Chen of Veduta Global Limited. The experts gave bank account details “provided by the Eastern National Oil Corporation to receive the revenues of oil exports” at Bank al-Etihad in Jordan and named Fadi Marie, head of treasury at the bank as the point of contact. Furthermore, the Panel of Experts observed that some of the contracts specified discounts of “$5 per barrel below the reference price of the National Oil Corporation in Tripoli.”


NOC chairman Eng. Mustafa Sanalla commented: “As the sole legitimate steward of Libya’s oil and gas resources, NOC has experienced first-hand the disruptive behaviour of criminal gangs and illicit institutions.  We praise the UN report for its detailed expose of the scale of criminality and corruption across the country. We welcome its findings and support its key recommendations without reservation.

“NOC has repeatedly called for additional measures to combat the illicit export and sale of petroleum products, reform of fuel subsidies, and the sanctioning of all individuals attempting to blockade and illegally profit from the sale of Libyan natural resources. This report corroborates the extent of the problem and corrosive influence of certain armed groups on Libyan society and key national institutions. The Libyan people deserve to know the truth behind the activities of those who seek to impede the work of NOC, and would divide this country irreparably.”

Key findings of the report

Illegal attempts at crude oil sales

The report highlights six attempts since August 2017 alone by the parallel institution to illicitly export crude oil; repeatedly attempting to short-change the Libyan people through the offer of contract discounts (up to $5 per barrel cheaper than the reference price), and the deposit of sales directly into foreign bank accounts. NOC would support any measure that promotes the addition of those involved in this illegal activity to the UNSC sanctions list.

Militia aggression against NOC

The report documents various acts that “threaten the peace, stability or security of Libya, or undermine the successful completion of its political transition”. The sheer extent of criminality by various armed groups against Libyan institutions, particularly NOC, is showcased.  Specific acts against NOC include attempts to complete deals at gunpoint (Tripoli Revolutionary Brigade, February 2018); and the intervention by the Martyr Fathi Arhaim Brigade of the Libyan National Army (LNA) in the Wintershall production dispute in Jikharra. Wintershall were instructed by the parallel institution (under direction of Faraj Saeed), and accompanied by the brigade, to only to deal with them and to maintain the production suspension. In the words of the report, this incident ‘illustrates how the interests of armed groups run counter to those of local communities and affect the normal functioning of the oil sector.’
Preventing crude oil exports

The report found that the ‘biggest challenge to the integrity of the NOC’ was the decision of the LNA General Command to transfer control of the Gulf of Sirte oil facilities to the parallel institution in Benghazi. This incident was exacerbated by the head of the Petroleum Facilities Guard in the Central and Eastern region ordering the prevention of tankers loading at Gulf of Sirte ports – a combined daily cost to the Libyan people of $33 million per day.  Incidents such as these (and others detailed below) highlight the parallel institution and its supporters' efforts to claim any operational or commercial legitimacy – irrespective of the cost to the Libyan state.

Attempts at misappropriation of Libyan State funds

The report evidences corrupt mechanisms put in place to divert Libyan revenue away from NOC and the national purse, including instruction by the parallel institution to pay for illicitly exported crude oil through a private bank account in Amman, Jordan. The same account details were previously specified during the Disteya Ameya attempt to steal crude oil in April 2016; leading to the vessel being designated, and its cargo returned to Libya. Further documents in the report include signed instructions by Faraj Saeed and interim government Prime Minister Abdullah al-Thani to international oil companies ordering them not to deal with the legitimate and recognised NOC - thereby contravening UNSC resolutions 2146 (2014) and 2362 (2017).

Policy recommendation support

Local and international measures to counter smuggling and corruption
 
De-licensing “ghost stations”
NOC will shortly announce the number of petrol stations across west Libya that have not at NOC’s request validated their operations, and thus will be de-licensed and no longer able to receive fuel. As mentioned in the report, an NOC-led investigation in 2017 revealed that 87 petrol stations were in fact “ghost stations” that did not exist, but were still used as destinations for fuel that would then be smuggled. New additional measures to counter this phenomenon will soon be announced by NOC’s subsidiary, Brega Petroleum Marketing Co.  

Extending the scope of UNSC 2146 (2014)

At an international level, NOC strongly supports the Panel of Experts’ recommendation to extend the scope of the measures contained in resolution 2146 (2014), authorizing Member States, acting nationally or through regional organizations, to inspect on the high seas off the coast of Libya, vessels bound to or from Libya which they have reasonable grounds to believe are illicitly exporting crude oil or refined petroleum products.

Extending sanctions list
Lastly, NOC calls for the UN Sanctions committee to continue evaluating the 48 names of individuals and entities it has delivered to the panel for consideration of designation to the UN Sanctions List.  Documents in the report reveal evidence of resolutions being regularly broken by the parallel institution’s Faraj Saeed, Prime Minister Abdullah al-Thani, a number of shadowy oil brokers and shippers, in addition to militias and individuals threatening Libyan institutions or preventing the export of crude or refined products.

Link to full Panel of Experts report: http://www.un.org/ga/search/view_doc.asp?symbol=%20S/2018/812