Libya plans to move the headquarters of its state oil firm to Benghazi, the city that started the uprising against Muammar Gaddafi and now wants greater influence, if a plan to restructure the corporation is approved by the national assembly.

Despite about 80 percent of Libya's oil being located in the east, Gaddafi moved the state oil firm to the capital Tripoli and starved the eastern region of investment.

"The headquarters will be in Benghazi," said deputy oil minister Omar Shakmak, referring to the terms of a new plan being finalised for approval by Libya's highest political body.

Easterners have been calling for greater control over the country's oil reserves - estimated to be the largest in Africa - since the uprising began in their region in early 2011.

At the start of the year, eastern workers and activists rejected a compromise by the government to move refining and petrochemicals to the east and even considered staging protests to threaten oil output.

Several assembly members told Reuters that easterners had since been promised the National Oil Corporation (NOC) headquarters would also move to Benghazi, but it was difficult to say when this would happen as they had not seen official paperwork yet.

"The prime minister then went to Benghazi and promised to move the NOC back to the city but no official resolution on this has been seen by the General National Congress (GNC) committee yet," said a member of the assembly's energy committee.

The wrangling over how to split the state oil firm has added to broader discontent in Benghazi over the prospect of further marginalisation of the east by Tripoli and fuelled calls for greater autonomy.

The NOC's predecessor, the Libyan General Petroleum Company, was set up in Benghazi in 1968. The NOC was established in 1970, a year after Gaddafi came to power, and relocated to Tripoli.

NOC Chairman Nuri Berruien said Prime Minister Ali Zeidan had promised to relocate the headquarters to Benghazi, but said it was a government issue.

"Moving an NOC or establishing an NOC has to be done by the government," Berruien said in Istanbul. "There have been promises, (but) I don't know if there's been any action."

SECURITY THREATS

Oil is Libya's lifeblood, which pumps at a rate of around 1.6 million barrels per day and has made the country rich despite its troubles.

While Benghazi led the uprising against Gaddafi, the city is far from being welcoming to foreigners these days.

In September, the U.S. ambassador and three other Americans were killed in an assault on their diplomatic mission, while an Italian consul was shot at in his armoured car in January, escaping unscathed. The United Nations and Red Cross missions have also been targeted by violence.

Various governments, including Britain and the United States, advise against travel to Benghazi, although British oil firm BP and some embassies have also pulled staff out of Tripoli, where government control has started to slip.

Shakmak said Zeidan had already signalled his support for the plan to move the headquarters.

"I have discussed this with Zeidan and he confirmed it was clear to him that this is his intention, and (the move) is only a matter of time," Shakmak told Reuters.

Zeidan's office said it could not comment and advised speaking with the oil ministry, which is in charge of the industry's regulatory framework.

Anthony Skinner, Middle East and North Africa director at risk consultancy Maplecroft, said the move would send a strong signal and help soothe eastern fears of marginalisation.

"The risk is that it will have adverse effects on investor appetite if regional groups and/or tribes are seen to be able to turn the screw on the government."

The current plan would also split upstream activities, such as exploration and production, from downstream activities, such as refining and marketing, according to Shakmak, with the former to remain in Tripoli under the terms of the plan.

This was holding the submission process up, the deputy minister said, as some easterners wanted the exploration and production business to move to Benghazi as well.

The NOC's largest oil-producing subsidiary, Agoco, has been leading calls for more control over its activities since it became the de-facto state oil firm during the uprising. – Reuters