Libya could finalize an agreement in two to three days with rebels to reopen key oil ports, a government spokesman said, bolstering hopes for an end to an eight-month standoff that dried up petroleum revenue.
Brent crude oil prices have fallen sharply since rebel leaders said their group would reach a deal within days to end the blockade of three ports that previously accounted for 600,000 barrels per day of Libyan crude exports.
Any such agreement will help the OPEC member halt its slide into instability. The weak central government seems unable to control militias who helped oust Muammar Gaddafi in 2011 but have kept their guns and made political demands on the state.
But there still appeared a way to go before a full agreement is reached as the rebels put a demand for a referendum for a federalist state on the table even as tribal leaders and officials sought to finalize the deal.
"Negotiations are still ongoing, but we expect an agreement to open the ports," a spokesman for interim Prime Minister Abdullah al-Thinni said, in the first official comment since rebel leader Ibrahim Jathran announced a pact late on Tuesday.
A deal, mediated by tribal elders, could be complete in less than a week, possibly two to three days, the spokesman said.
Movement towards an agreement came after the federalist rebels managed to load oil onto a tanker at one port they control and force it out to sea in an attempt to sell the crude. It was later boarded by U.S. commandos and returned to Libya.
Any talk about introducing a federalist state - devolving some powers and control of oil revenue to regional authorities - like under Gaddafi's predecessor King Idris is sensitive as the government fears it might open the door to secession.
Deep divisions exist between the long-neglected east and the capital Tripoli and richer western cities such as Misrata, compounding Libya's rivalries among tribes, competing political factions and brigades of former rebel militias.
Thinni's spokesman said the deal would focus on compensation for the rebel fighters, who had defected from the state oil security force along with their leader Jathran in the summer when they seized the ports.
A solution would also address the rebel demand to use efficient metering systems to improve monitoring of oil sales and avoid corruption, he said.
In an sign the government is shifting, the cabinet decided to move the headquarters of a state oil protection force to the eastern town of Brega, where Jathran's main office and force is based.
Jathran had been head of the oil force working out of Brega until he defected with thousands of men in the summer. The cabinet also approved financial benefits for some workers in the east, according to a government statement.
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