Different militias took over the terminals this summer. Some have aspirations for self-rule in the eastern region while others accuse the government of corruption in oil deals.
Since the seizures Libya's oil production sharply declined from 1.4 million barrels a day to few hundred thousand barrels a day. The government has been negotiating with the militias and up until now has not used force against them.
Rebels-turned-militias have mushroomed in number and force since the toppling of longtime dictator Moammar Gadhafi in 2011. The government relied on them at first to fill a security vacuum, but many have since pressed various agendas based on regionalism, pre-war grudges, and in some cases hard-line Islamist ideology.
The government said on Wednesday that it will stop paying militias by Dec. 31 this year. It said it was time to start "integrating the revolutionaries (into the army and police) and dismantling the armed groups."
"There will be no payments of any rewards or grants after this day except for an employee or a state worker" in the police and army, the statement said.