The Italian news agency Nova has exposed the emergence of a new financial mechanism within Libya’s oil sector, where subsidiaries of the National Oil Corporation are resorting to “proxy payments” to navigate the acute liquidity crisis. This arrangement allows for sector-related payments to be executed entirely outside the state’s official financial framework.
The value of transactions processed through this method over the past five months is estimated to be approximately $200m, with the Arabian Gulf Oil Company (Agoco) in the Barqa region identified as the most heavily involved in this practice. The mechanism operates by having a foreign commercial partner provide immediate liquidity to the oil company. Repayment of this advance is not made via standard bank transfers but is instead settled through direct shipments of Libyan crude oil.
Nova also reported that Agoco has already received foreign currency advances from international companies such as OMV and Repsol. While these funds provided critical liquidity to cover operational costs, they simultaneously deepened the sector’s reliance on financial settlements conducted without governmental oversight
This new development bears a resemblance to the fuel-for-trade-credit swap operations that the General Prosecutor previously cancelled this year due to a lack of transparency. However, the current iteration is deemed more dangerous, as the form of compensation has shifted from purchasing fuel to direct settlement with crude oil cargoes. This places a strategic national industry at the core of unprecedented financial and legal risks.
These off-book financial arrangements are surfacing amidst intense pressure on public finances. The Governor of the Central Bank estimated that Libya requires $3bn to meet its obligations, while its revenues are barely reaching $1.5bn at best. Furthermore, the Italian agency projected a potential drop in oil prices to between $52 and $55 per barrel, a scenario that could render the government incapable of paying public salaries.
