Libya's National Oil against paying 'ransom' to reopen El Sharara field

By Ayman al-Warfalli

BENGHAZI, Libya (Reuters) - Libya's state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country's largest oilfield.

"Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy," NOC Chairman Mustafa Sanalla said in a statement on the company's website.

NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.

The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.

Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country's weak state into concessions.

Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.

At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.

NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.

The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.

The tribesmen have asked for long-term development funds, which might take time.

Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.

(Reporting by Maher Chmaytelli, Ayman al-Warfalli and Ulf Laessing; Writing by Maher Chmaytelli and Ulf Laessing; Editing by Dale Hudson and Susan Fenton)