Big oil-producing countries have faced a double-hit in recent months: the sudden drop in prices of oil and the economic impact of the global pandemic. In the case of Angola, which entered both crises with an already weakened economy, how are its prospects looking? The Africa Report speaks to Sergio Pugliese, the Executive President for the African Energy Chamber (AEC), to find out.
With its oil terminals under siege, Tripoli considers mining
Libya's geology contains significant reserves of gold, iron, and magnesium. The minerals have not been exploited, and the Tripoli government sees them as a "remedy" in the face of falling oil production.
Ali al-Issaoui, the Minister of Economy of the internationally recognised Tripoli Government of National Unity (GUN), says he is ready to welcome international companies to exploit mineral wealth.
“This is a still virgin sector in Libya. We have geological studies that prove that we have underground wealth. If oil revenues continue to be lacking, we could have recourse to it,” explained the minister while in Tunis for an event hosted by technical cooperation agency Expertise France (which was eventually cancelled due to the coronavirus pandemic).
The Minister did not specify the revenues this sector could generate, but studies going back several decades estimated the iron ore reserves in the Libyan Sahara at 3.5bn metric tons. In 2006, the Minister of Industry and Mines, Mohamed Bachir Baegi, assured the world that Libya had the third largest iron ore reserves in Africa.
The Tibesti Mountains on the border with Chad are also known for their gold mines, as evidenced by the presence of many illegal gold miners in the region. The country reputedly has significant reserves of magnesium, as well.
Drastic budget cuts
These untapped riches, however, are located in the south of the country, in an area controlled primarily by armed Toubou and Tuareg groups.
This does not seem insurmountable difficulty for Ali al-Issaoui, who points out that the oil multinationals have never left the region where the black gold fields are located, despite the security troubles they have experienced since 2011.
For the minister, the current situation requires, in any case, drastic solutions: “We lose $50 million [44.8 million euro] every day because of the oil blockade,” he said.
In early February, supporters of Marshal Khalifa Haftar occupied the main terminals and oil fields in order to accelerate the fall of the GUN. Since April 2019, Haftar’s self-proclaimed Libyan National Army has tried to enter Tripoli to seize power.
Oil production has dropped from 1.2 million barrels per day to 110,000, according to the National Oil Company.
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A spectacular fall, accentuated by the halt in demand from China, which in the first half of 2019 was the third largest buyer of Libyan crude oil with 105,000 barrels per day.
Faced with this loss — which represents 95% of tax revenues — the government slashed the budget by 30%, from 55 to 38 billion dinars (24.4 billion euros at the official rate, 7.4 billion euros at the black market rate).
“We have suspended all investments and the infrastructure maintenance programmes (oil, roads, electricity, etc.) have been revised downwards,” explained Ali al-Issaoui, who pointed out the government has not been able to put a precise figure on the cost of the destruction caused by Haftar’s offensive on Tripoli.
Ali al-Issaoui also announced the first issue of sukuks (financial certificates) in Libya, without specifying the amount and terms.