The story of last week was that OPEC, at its annual meeting in Vienna on Thursday, decided not to cut oil production despite the recent price freefalls in the energy market.
But there was something else going on at the meeting, which didn’t get as much attention: who represented Libya.
The North African country is an OPEC member, but currently has two goverments, which both believed they should be entitled to send delegates to the meeting.
Here’s the story, from Reuters:
Libya has two cabinets and parliaments vying for legitimacy since a rival group took control of the capital Tripoli in August, installing its own prime minister and assembly and forcing the country’s internationally recognised prime minister, Abdullah al-Thinni, to move his operations to the east of the country.
The United Nations and world powers have not recognised rival Prime Minister Omar al-Hassi, but his political alliance controls major ministries in Tripoli.
While some people expected that OPEC wouldn’t take sides, in the end, OPEC followed the lead of the United Nations and extended an invitation to the delegates of al-Thinni, further legitmising his government, according to Steve Fox at Middle East Eye.
Libya’s actual role in the meeting was relatively small, since it was one of three countries that OPEC exempted from any production cut decision prior to the meeting on November 27th. Production is already down more than 70% from its average rate before Muammar Qaddafi was overthrown. This year Libya is producing about 437,000 barrels a day — down from 1.55 million a day in 2010, according to Bloomberg.
Libya’s oil industry is screwed. And its oil industry is its economy. According to OPEC’s own data, oil is 95% of total exports.
In part because of dramatic production cuts, Libya doesn’t have a hope for making any money on oil this year, anyway. According to Reuters, oil revenues in Libya will fall to “15 billion Libyan dinars ($US12 billion) this year, down from 40 billion dinars in 2013.”
Oil would have to be six times higher than it is for the country to be in the black. Check out that breakeven price: