LONDON—Libyan National Oil Co. assured Western companies that their payments are properly managed

Firefighters work to put out the fire of a storage oil tank at the port of Es Sider in Ras Lanuf on Dec 29, 2014. Photo Reuters

National Oil Co. has been caught in the middle of a conflict playing out since the ouster and death of dictator Moammar Gadhafi.

Last month, Total was forced to write down $659 million on the value of its assets in Libya in the first quarter while Austria’s OMV AG said Monday it didn’t expect production in the country to resume this year.

“Many companies consider [Libya] a loss for the time being,” said Geoff Porter, head of North Africa Risk Consulting, which has advised oil companies operating in Libya. “They are just waiting for the situation to improve but they know it will take some time.”

Other companies have been worried about the diversion of oil-revenue-which make up about 95% of its exports revenue—to finance the conflict.

“The U.S. companies were worried the oil payments could be used to fund militia,” said one person who attended the meeting with Mr. Sanallah.