Is the UN-PFG Oil Deal for Real?
Following up from my article in Al-Monitor of last week, detailing the blowback of the UN’s deal with Jadhran, I attempt to explain below the delusions of NOC and UN pronouncements and how they are crafted to misled with their unconditional optimism.
After condemning the UN facilitated deal between the Presidential Council and the PFG publicly and aggressively on 26 July, the Tripoli-based NOC issued a statement on 31 July welcoming the ‘unconditional re-opening’ of the ports. It also said that the NOC had received from the Presidential Council the funds required to increase production by another 150,000 barrels by the next two weeks, and hopes to reach 900,000 Bpd by the end of 2016. This estimate is simply pie in the sky. The NOC explained that initially this is highly likely expected to come from AGOCO’s increased production in the Sarir basin via Tubruq’s Hariga port, not the oil crescent ports. In its statement the NOC said that it would still not lift force majeure on the oil crescent ports before discussions with international oil company partners to indemnify the NOC from liability in case of a new blockade of the ports/oil fields. The NOC also noted that there are still big military, political and legal obstacles that must be resolved before force majeure is fully lifted, but it will immediately begin the process of re-mobilising workers back to the fields. Interestingly, the Tripoli based NOC said it will work with the PC and the HoR’s energy subcommittee to resume exports from the blockaded oil fields/ports, indicating that lines of cooperation between the rival NOC’s across the political divide remain open, even if not fully cemented. This big talk is contradicted by the track record of the various actors on these issues.
Meanwhile, the LNA Chief of Staff, and military governor in eastern Libya Abdul Razak Al Nazhouri reiterated warnings on 31 July to target any oil tanker not gaining approval from the rival NOC established by the HoR’s interim government in Benghazi. This threat, coupled with the internationally recognised NOC’s delay in lifting force majeure, mean that exports from the oil crescent remain unlikely in the immediate term, and risks will be very high for any tanker attempting to enter these ports. There is a high possibility that the NOC make a partial lift of force majeure for Zeuitina port only, to facilitate exports of stored crude oil there in the coming days but this could complicate the bigger political picture and fuel rivalry between the political administrations in East/West Libya.