December 20, 2014 / 3:12 PM / in 3 years

Libya's official government aims to set up new payment system for oil buyers

Libya's Prime Minister Abdullah al-Thinni speaks to reporters in Abu Dhabi September 10, 2014. REUTERS/ Stringer

TRIPOLI (Reuters) - Libya’s internationally recognized government aims to set up a new payment system to receive oil revenues, bypassing the central bank based in Tripoli, the capital city that is no longer under its control, its top oil official said on Saturday.

The OPEC oil producer has had two parallel governments and parliaments since August when a group called Libya Dawn seized Tripoli, forcing the recognized administration of Prime Minister Abdullah al-Thinni to the east.

The central bank, which books oil revenues, has sought to stay out of the conflict, but each side has appointed competing officials to run National Oil Corp (NOC), the company that sells Libyan oil.

Last month, Thinni named al-Mabrook Abu Seif as head of NOC after the rival government appointed its own oil minister to work in the company’s headquarters in Tripoli.

The question of who owns Libya’s oil is key for foreign buyers. For decades, they have paid for Libyan crude through a state bank linked to the central bank in Tripoli.

In an attempt to prevent oil revenues reaching the rival side, Thinni’s government aims to set up a system for foreign oil buyers routed through an eastern branch of the central bank, Abu Seif said in a telephone interview.

“We’ve discussed this with the prime minister and the president of the House of Representatives and central bank head ... (Ali Salem) Hibri,” he said, referring to the man appointed by the Thinni-allied parliament after it voted to fire Sadiq al-Kabir who is still acting as governor, according to the central bank’s website.

No final decision had yet been taken, Abu Seif said.

Thinni’s government also plans to make changes at the top of NOC but will not set up its own, separate oil firm, he said, even though officials based in the east have difficulties maintaining contact with NOC staff in Tripoli.

The central bank is currently keeping oil revenues in its coffers, with the exception of civil servants’ salaries and food subsidies, in an attempt to stay out of the fray.

But a struggle for oil revenues is likely to intensify as both governments will need a new budget from 2015. Thinni has said his government was living off a bank loan.

Oil output fell by an estimated 300,000 barrels per day last week due to the closure of the biggest ports, Es Sider and Ras Lanuf, after a force allied to Tripoli launched an offensive to take them. Both sides have been fighting over the area since then.

Editing by Robin Pomeroy

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