Libya’s Bungled Oil Deal
In an article in Al-Monitor, I argued that the political fractures that are preventing progress on ISIS are the same ones preventing progress on exporting oil and this is shown by the so-called national oil deals. The July 2 merger of the rival eastern and western National Oil Companies (NOC) is a sham, announced likely to demonstrate “progress” to the Western.
The eastern Tobruk government and the western Tripoli-based GNA are still pursuing different oil policies and maintain separate NOCs. Simultaneously, each is trying to prevent the other from benefiting from the country’s oil wealth. In retrospect, it appears the merger announcement three weeks ago was likely fabricated to allay Western demands for progress in the oil sphere… Rather than seeking to secure genuine political compromises or incentivize coordinated fighting against the Islamic State (IS), the UN appears to have prioritized bribing key militias to allow oil to flow through infrastructure that they control.
The dynamics which underpin Libya’s problems are equally at work in the oil sector
It has long been appreciated that it is not IS’ control of the coastline, but rather the rivalries between the federalists — rogue Gen. Khalifa Hifter‘s Libyan National Army (LNA) — and the Islamist-aligned militias of Misrata that are preventing a resurgence of Libyan hydrocarbon exports. The federalists have long occupied the key terminals Ras Lanuf and Sidra, which are located in the oil crescent region that stretches from Bin Jawwad, east of Sirte, to Marsa Brega, southwest of Benghazi.
Knowing that possession is nine-tenths of the law, they shut off the spigot of Libya’s key oil terminals in 2013-14, when prices were still reasonably high, bringing the then-government in Tripoli to its knees. By their own admission, their “strike” cost Libya approximately $100 billion in revenue.
All these boycotting groups would be better served if Libya’s oil flowed and the wealth was reasonably fairly distributed. … [Federalist leader Ibrahim] Jadhran does not want the oil to flow if the Tripoli-based NOC, and hence Misratan and Islamist interests, benefit from the cash. Those interests and the UN may be willing to buy Jadhran off to let the oil flow, but doing so will cut other actors out of the game, such as Hifter or the Tebu militias in the south, engendering them to derail things. While Jadhran may have control of the oil ports in Zuetina, Sidra and Ras Lanuf, the LNA and aligned tribes control the oil fields in the Sirte and Sarir basins, meaning that steady oil exports are unlikely to resume in the short term.
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