News
27/08/26
Libya NOC $1bn funding facility yet to be used
Libya NOC $1bn funding facility yet to be used
London, 27 August (Argus) — Libya's state-owned NOC has yet to draw on a $1bn
revolving credit facility intended to finance projects that could raise crude
production by 250,000-270,000 b/d, a source with direct knowledge of the
arrangement told Argus . Implementation has stalled over how the funding would
be provided and the due diligence requirements attached to the facility, the
source said. Under the arrangement agreed in February, state-owned Libyan
Foreign Bank (LFB) would issue letters of credit to upstream contractors working
on NOC projects and later recover the funding from oil revenues. But NOC wants
part of the facility transferred directly to the company in cash rather than
used to issue letters of credit to contractors, the source said. The proposed
projects involve eight NOC affiliates, including Agoco, Waha Oil and Sirte Oil.
They could add 250,000-270,000 b/d within 18 months, the source said. This would
cover a substantial part of the increase needed to meet NOC's longstanding
target of raising crude production to 2mn b/d from around 1.4mn b/d. Due
diligence requirements have also contributed to the delay, according to the
source. These include checks on companies and banks involved in the proposed
projects. "They don't want anybody else digging into these companies. They've
spent six months trying to manoeuvre around these controls," the source said.
NOC was contacted for comment on the claims concerning its request for direct
funding and the due diligence requirements. NOC chairman Masoud Suleiman met LFB
chairman Mohammed Ali Addarrat earlier this month. The meeting focused on
financing mechanisms for several proposed NOC projects, including infrastructure
development and increased storage capacity, NOC said. The facility would
represent a departure from NOC's usual funding model, under which contractors
are paid using funds allocated by Libya's central government. NOC has repeatedly
fallen behind on payments, making contractors including SLB and Halliburton
reluctant to take on new work until outstanding debts are repaid, according to
the source. The head of a Libyan contracting firm said LFB wanted a clear "paper
trail" to ensure the money was spent on the agreed projects. "NOC has a recent
track record of using money in other areas or to pay off debt as it's struggling
to keep up with payments to services companies and contractors," he said. If NOC
cannot persuade LFB to provide cash directly, it may have to "bite the bullet"
and accept the bank's conditions, he added. Emergency funding The credit
facility could also reduce NOC's reliance on irregular state funding. Libya's
oil export revenues are deposited in an NOC account at LFB before being
transferred to the central bank. The central bank, which owns LFB, is
responsible for allocate funds to NOC for operating and development expenditure
through the state budget. But years of political division between rival eastern
and western authorities have left NOC without a formal budget, forcing it to
rely on sporadic emergency funding from the central bank. "NOC received around
something like $12bn from the central bank in emergency funding between 2022 and
2025," said Jalel Harchaoui, a Libya specialist at the UK's Royal United
Services Institute. "This is a serious sum, but it is not clear how this money
was spent." Oil revenues deposited at LFB totalled $15.8bn in the first seven
months of this year, according to the Libyan Audit Bureau. NOC periodically
transfers most of its dollar revenues to the central bank but retains a working
balance at LFB, giving it limited control over part of the proceeds. It draws on
that account to pay for oil product imports. A direct transfer from the credit
facility would give NOC greater control over the funding. It would echo a 2024
proposal by former NOC chairman Farhat ben Gudara for the company to draw
directly on its oil earnings and set its own budget, bypassing the state budget
and central bank funding process. By Aydin Calik Send comments and request more
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