Libya’s beleaguered oil industry took another massive hit this week as rebel’s shut down the El Sharara field, Reuters are reporting.
This is the latest development in a 7 month saga that has seen protesters occupy Libya’s Eastern oil ports, slashing the country’s oil output from 1.4 million barrels per day in July 2013 (bpd) to just 230,000 bpd.
Libya depends almost entirely on oil revenue and spends half its annual budget on public sector wages. The concern is that as the country’s oil funds dry up, the government will have less money to spend on security creating a vicious cycle of escalating violence.
Some Libyan government ministries are struggling to cover expenditures because of budget problems, a minister said on Sunday.
The Libyan government warned vital government services such as health care and electricity supplies were at risk unless the GNC assembly agreed on a budget for 2014.
The government has submitted a budget draft to the GNC but did not release details. Analysts say it will be difficult to overcome a funding gap as oil revenues might halve this year compared to the typical level of around $50 billion.
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