Al-Shalawi: “Discrepancies in Oil Revenue Data; Between Revenue Collection and the Settlement of Financial Obligations”

Written by oil and economic expert Abdulmonsef Al-Shalawi: An analytical reading from an oil and economic perspective.

When discussing discrepancies between published oil revenue figures, it is important to distinguish between two different financial processes: collecting revenue generated from crude oil sales and depositing it into designated bank accounts, and settling the cost of fuel supplied to the domestic market in accordance with approved financial arrangements and decisions.

The National Oil Corporation (NOC) is responsible for oil production, exports, marketing, and revenue collection. According to its statements, it deposits oil revenues with the Libyan Foreign Bank. The settlement of fuel costs, however, follows approved financial mechanisms that include letters of credit opened in favor of suppliers, the allocation of funds in accordance with established procedures, and the subsequent transfer of the remaining balance to the Central Bank of Libya (CBL).

It is important to recognize that the NOC does not independently determine every element of this financial system. The settlement mechanism is linked to decisions and arrangements involving several executive, financial, and oversight authorities. In its latest statement, the corporation explained that the current financial mechanism was approved through coordination among the Council of Ministers, the Audit Bureau, the Office of the Attorney General, the Governor of the Central Bank of Libya, and the Libyan Foreign Bank.

The statement further explained that deductions to cover letters of credit for fuel supplies are made in accordance with the approved agreement under Council of Ministers Decision No. 525 of 2026, with the remaining balance transferred to the Central Bank of Libya.

The NOC had previously clarified that fuel supplies financed through letters of credit follow financial arrangements agreed upon with the Ministry of Finance and the Central Bank of Libya, under the supervision of oversight authorities and the Office of the Attorney General. This distinction is essential to understanding how responsibilities are distributed among those who approve financial arrangements, implement supply and settlement procedures, and supervise and monitor them.

Historical Background Explains an Important Part of the Picture

Understanding the current discrepancies requires examining how fuel financing mechanisms have evolved over time. Offsetting crude oil revenues against fuel supply costs was not introduced in 2025. The practice dates back to 2012, while its formal adoption through a Council of Ministers decision took place in 2021. Reliance on this mechanism gradually expanded until it became the principal method of securing fuel imports by 2022, amid declining financial allocations available to cover supply costs.

The mechanism remained in use under successive administrations, including the administration that preceded the previous leadership of the National Oil Corporation. The suspension of the swap system was then announced, effective March 2025, followed by a transition to arrangements based on letters of credit, which, according to the corporation’s statements, began operating in February 2026.

This historical background reveals that fuel financing involves financial and procedural issues accumulated over several years. It cannot be reduced to the actions of a single administration or to a numerical comparison between two institutions without tracing the evolution of financing and settlement mechanisms and the decisions governing them.

Accordingly, determining responsibility requires examining the decisions in force at each stage and distinguishing between the approval of financing mechanisms, the execution of fuel supplies, the settlement of their costs, and the recording of their impact in bank accounts.

Three Financial Processes That Should Not Be Confused

From an accounting perspective, three related but distinct processes must be distinguished.

First: Oil revenue collection.

This includes producing, exporting, and marketing oil, collecting the proceeds, and depositing the revenue into the designated sovereign bank account in accordance with approved procedures. The NOC’s performance in this area should be assessed on the basis of sales, collection, and actual deposit records.

Second: Settlement of fuel costs.

This involves determining the obligations owed to fuel suppliers, opening letters of credit or applying the approved settlement mechanism, and following the financial decisions and procedures in force. It is therefore important to identify the authority that approves the obligations, the entity that issues the instructions, the party that actually executes the settlement, and the bodies responsible for supervision and oversight.

Third: Transfer of the remaining balance to the Central Bank.

At this stage, the total funds collected must be reconciled against the amounts allocated to settle obligations and the sums actually transferred to the Central Bank of Libya, taking into account the dates of accounting entries and transfers.

Consequently, if the figures published by the NOC represent total revenues collected and deposited, while the Central Bank’s figures represent the amounts transferred to it after fuel costs have been settled, directly comparing the two figures without aligning their accounting basis and reporting periods does not provide a complete financial picture.

However, proving that the entire difference is attributable to fuel costs requires reconciling bank statements, opened and executed letters of credit, and the dates of settlements and transfers. The mere existence of a deduction mechanism is not sufficient to establish that the entire discrepancy was settled through it.

Where Should Accountability Be Directed?

The core issue is not simply that two figures differ. It is the need to explain the entire flow of funds, from the collection of oil revenue to the transfer of the remaining balance to the Central Bank.

If the NOC collected the revenues and deposited them as documented in its bank records, and if it presented this information through separate statements and periodic publications detailing revenues collected and transferred to the sovereign account, its performance in this area should be evaluated against those records—not against the net amounts subsequently appearing in another institution’s accounts.

Conversely, settling fuel costs, determining outstanding obligations, deciding how they are financed, and reporting their financial impact require disclosure of the relevant decisions, letters of credit, and accounting entries, with each authority assessed according to its responsibilities.

In this context, identifying the authorities involved in approving the mechanism through coordinated arrangements is not a minor administrative detail. It is essential to understanding the distribution of responsibilities.

The Council of Ministers issued the decision referenced in the approval of the agreement. The Central Bank of Libya and the Libyan Foreign Bank play roles within the banking and financial process. The Ministry of Finance is involved in arrangements relating to fuel financing, while the Audit Bureau and the Office of the Attorney General exercise their oversight and legal functions within their respective mandates.

This does not mean that all these authorities perform the same function or bear equal responsibility for every transaction. Establishing actual responsibility requires examining the decision, the approved agreement, implementing instructions, and bank records to determine which authority approved each procedure, which entity executed it, and which party was responsible for recording and disclosing it.

Responsibility cannot therefore be determined merely by looking at which institution announced the larger or smaller figure. It requires identifying the nature of the figure, the period it covers, the financial stage it represents, and the authority that holds the relevant records and has the corresponding mandate.

Nor should this analysis be interpreted as granting any institution advance immunity from accountability. The professional standard is the same for everyone: What was collected? What was deposited? What was allocated to settle obligations? What was actually transferred? Who approved and executed each procedure? And how were these transactions reflected in published financial accounts?

The Transparency Needed: A Unified Statement of the Revenue Cycle

From an economic and institutional perspective, the appropriate response is to publish a unified, periodic financial reconciliation containing:

• Total oil revenues collected and deposited, with the reporting period clearly specified.
• The value of imported fuel and the obligations owed to its suppliers.
• The value of letters of credit opened and executed, distinguishing approved obligations from actual payments.
• The amounts settled or allocated for fuel costs, together with the dates of the relevant accounting entries.
• Net transfers to the Central Bank of Libya, explaining timing differences and any outstanding or unsettled amounts.
• The decision or agreement underpinning each settlement, the authority that approved the procedure, the entity that executed it, and the bodies responsible for supervision and oversight.

Publishing these data as part of an integrated financial statement would help resolve much of the confusion among the public and prevent the NOC’s performance in collecting oil revenues from being conflated with the subsequent management and settlement of financial obligations.

Full disclosure of the financial process would also make it possible to verify that amounts allocated for fuel correspond to actual obligations, that the letters of credit designated for this purpose were executed in accordance with approved procedures, and that the remaining balance was transferred to the Central Bank in a manner that can be reconciled and audited.

Conclusion

Defending transparency in the oil sector does not mean siding with one institution against another. Likewise, disclosing the revenues collected does not eliminate the need to explain how those funds were subsequently managed and settled. Oil revenue, amounts allocated to cover fuel costs, and net transfers to the Central Bank are interconnected indicators, but they do not necessarily represent the same figure.

Accordingly, holding the National Oil Corporation responsible for the entire discrepancy between its figures and those published by the Central Bank, before verifying the movement of funds and the decisions governing settlements, does not rest on a complete accounting basis. At the same time, determining ultimate responsibility requires reconciling the data and supporting documents rather than relying solely on assumptions.

What is needed today is not an exchange of accusations, but a comprehensive financial account that reveals the movement of oil revenues from collection through settlement and transfer, while identifying each authority’s responsibilities according to its actual mandate, in light of Council of Ministers Decision No. 525 of 2026, the agreement approved under it, and the associated banking and oversight procedures.

The performance of an institution that reports its revenues and explains what it has collected and deposited should be assessed in that area against collection and deposit records. Similarly, settlement, transfer, and financial disclosure processes should be evaluated against the relevant documentation and institutional responsibilities.

Only in this way can the discussion move beyond fragmented comparisons of figures toward institutional accountability grounded in facts.

True transparency does not end with announcing revenue. It extends to disclosing its entire journey—from the moment it is collected, through the settlement of related obligations, to the final balance reaching the public treasury.