* Libya NOC plans to open Benghazi branch
* Protests at Tripoli headquarters over role
* Benghazi oil workers want more local authority in region
By Marie-Louise Gumuchian and Ghaith Shennib
TRIPOLI/BENGHAZI, Libya, Nov 1 (Reuters) - Libya's National Oil Corporation is reviewing a proposal for a Benghazi branch as officials contend with opposition by NOC staff in Tripoli versus protests and threats of output cuts by workers in the oil-rich east who want more control there.
The NOC in early October issued a resolution to open a branch in the eastern city of Benghazi, cradle of last year's revolt against Muammar Gaddafi and where the country's biggest oil company was the first to restart production.
But workers at its Tripoli headquarters protested at the powers the branch would be granted.
In a country where regional rivalries are rife, oil officials are now re-working "NOC Resolution 100", which has stirred discontent by oil workers in the east, who want more authority in a region accounting for around 80 percent of Libya's oil wealth.
" Opening an NOC office in Benghazi will ease Tripoli's load," Yussef al-Ghariani, an engineer at Jowfe oil services firm, said.
"I'm against reducing output or using oil as pressure, but the situation is bad. People are upset and if there is no solution, things may get worse and output may be affected," he added.
The struggle over NOC's powers adds to broader discontent simmering in Benghazi as some people say they still feel marginalised by Tripoli.
"People are very sensitive about regional issues," a senior Libyan oil official said. "A committee was formed to review the resolution, and upon that the NOC will re-issue it."
The Oct. 4 proposal said the NOC branch in Benghazi would include departments in charge of petrochemicals and refining, exploration and production, finance, administration and human resources.
The branch would supervise eastern-based companies such as the Arabian Gulf Oil Company (Agoco), Sirte Oil Company and Ras Lanuf Oil and Gas Processing Company.
BOTH SIDES ADAMANT
NOC workers in Tripoli protested that no powers should be devolved from their office.
"The NOC should remain in the capital as has been," one NOC official said. "Benghazi should just be a support branch."
Less than a week after publishing the proposal the NOC said it would amend it. That sparked protests in eastern Libya by workers at Agoco and Sirte Oil.
"People first called for an NOC office in Benghazi. Now the proposal is frozen, (and) some are demanding the NOC be based here," a senior official at a Benghazi-based oil company said.
"Some workers are threatening that if nothing happens soon, they will start cutting production little by little."
Deputy Oil Minister Omar Shakmak said the amended resolution would come out soon and that it could then take a while to open an NOC branch in Benghazi for logistical reasons.
"The oil industry in Libya is the key source of income. This is for all Libya; it doesn't matter where it is from," he said.
In future the Benghazi office could deal with downstream, or refining, in all of Libya on top of the oil companies operating within its remit, he said.
"All daily reports would go to the NOC main office," he said, adding that marketing of oil would be done in one place.
"There will be workshops soon looking at the future Libyan oil industry," he said. Any new exploration and production deals are still likely to be supervised by Tripoli, officials say.
Already as part of efforts to decentralise and improve administration, Libya's new rulers in June opened an oil ministry office in Benghazi, Libya's second-biggest city.
Libya's east was starved of cash during Gaddafi's rule, and long-standing complaints the region has been deprived of its fair share of wealth have led to calls for a federal political structure rather than strictly central rule.
"Although there is logic to having some oil operations based in Benghazi, it is unclear how roles and responsibilities would be divided," Control Risks analyst Henry Smith said.
"Foreign companies are unlikely to have any clarity about this issue until the constitution brings clarity to national- and regional-level resource management."
Tripoli has already laid out plans to devolve powers to the NOC's subsidiaries.
Benghazi-based Agoco, Libya's biggest crude producer, was the first to restart production after last year's war, and for a while marketed its own oil to international firms.
The east is also home to Ras Lanuf, the country's biggest refinery, and key export terminals Marsa al-Brega and Tobruk.
Easterners also cite the NOC's historical roots. Its predecessor, the Libyan General Petroleum Company, was set up there in 1968. The NOC was established in 1970, a year after Gaddafi came to power, and relocated to Tripoli.
Libya's new rulers know they have to strike a careful balance, but even politicians say they are powerless.
"If people feel their voices are not heard, that could create problems," a member of the ruling General National Congress' energy committee said. " B ut we as GNC members are powerless, it is the oil workers in fields who have the power." (editing by Jane Baird)