Exclusive - Libya: The Battle for Oil

Exclusive - Libya: The Battle for Oil

Saturday, 14 July, 2018 - 09:00
Fire rises from an oil tank in Ras Lanuf, Libya. (Reuters)
Libyan-Egyptian borders – Abdul Sattar Hatita
The battle for oil throughout Libya has led to the obstruction of operations at its ports, the burning of its refineries and halt of oil and gas exports to Europe. Several companies have, however, benefited from Libya’s absence from the energy market. The Libyans, meanwhile, are suffering the most from the oil crisis in their country, which has led to a shortage in food, energy cuts and lack of health services.

Libya’s budget depends on oil and gas, which make up more than 95 percent of its exports. Under the rule of former leader Moammar al-Gaddafi, the country used to export some 1.6 million barrels per day (bpd). This figure dropped sharply with his ouster in 2011.

For seven years, oil ports have been at the heart of conflicts and have become a hub for militias, including extremist groups. The oil crescent region, which lies between Ajdabiya town west of Benghazi and Sirte east of Tripoli, suffered the most from the deterioration of security in Libya, especially after gunmen seized vast swathes of the country since 2013.

The closure of the ports lasted three years. During this time, calls were made for the eastern oil-rich region to break off from the rest of Libya. It was during this time that Ibrahim al-Jadhran, of the al-Magharba tribe, emerged on the scene as the commander of the Petroleum Defense Guards. His tribe is based in the northern and central oil export regions.

The major oil exports are produced primarily in the central Sirte basin, where the oil crescent is located, the Murzuq basin in the South and the Ghadames basin in the West.

Oil crescent dispute

The oil crescent is the most prominent of Libya’s oil regions although its correct name is the “Sirte basin”. It includes over 15 petroleum fields, which can produce a little less than 250,000 bpd, and several international companies are eyeing the region for future investment opportunities or for reviving old agreements that were impeded by the conflict. The majority of the fields are located in a desert region south of Ajdabiya and extend to the al-Wahat fields. Pipelines from the region reach the refineries and export facilities on the Mediterranean near Tobruk, in Benghazi, Ajdabiya, Ras Lanuf and Sidra.

Prominent tribes in the region include al-Magharba, al-Abaydat, al-Minfa, al-Qataan, al-Awagir and the rival Zuwayya and Toubou. Jadhran and his militias were expelled by the Libyan National Army (LNA), commanded by Khalifa Haftar, from the oil crescent region last month for the second time in as many years.

Since oil was discovered in Libya in the 1950s, American and British companies vied to acquire equal share with Libya of the Sirte basin. These firms paved dozens of roads in the heart of the desert in order to drill for oil. They also built several small airports to transport experts and employees to the remote regions.

The majority of the companies departed Libya, however, after Gaddafi ordered the nationalization of the sector. The National Oil Corporation (NOC) was set up in 1970 and it became the country’s sole oil wealth manager.

Since 2011, outlawed groups, including extremists and others affiliated with foreign powers, have exploited the chaos that ensued in the oil regions to seize the roads and facilities. Several of the sector’s workers were killed in ambushes in recent years. This forced oil companies and foreign experts to cease their work and depart Libya until calm and order are restored.

Despite disputes raging over the Murzuq and Ghadames basins, the conflict over the Sirte basin has taken up most headlines because it is caught between rival historic forces: The Barqa region in the East and the Tripoli region in the West. Fierce competition had raged for centuries between these rivals and it has taken on a new edge with the emergence of regional and international powers that are vying for Libya’s oil and gas.

The major dispute over the oil crescent first erupted after the 2014 parliamentary elections that saw civil movements defeat Islamists. The latter resorted to arms in protest and its militias kicked out the parliament from Tripoli to Tobruk.

That year, Haftar regrouped what was left of the army and launched Operation Dignity against the extremists, who were receiving backing from Misrata and Tripoli leaderships.

Jadhran was expected to declare whether he stood with or against the LNA and eventually opted to side against Haftar’s forces.

Ever since then, leaders in western Libya have desperately tried to recapture complete control of the Sirte, Murzuq and Ghadames basins. Many tribes, including al-Tabou, had sided with the LNA to prevent one camp from monopolizing the country’s oil wealth.

Libya’s oil exports suffered huge losses in 2014 and 2015 until the LNA succeeded in kicking out Jadhran’s extremist groups from Benghazi and set up base in the strategic city. This allowed it to eventually completely capture the oil crescent.

The victorious Haftar gave the Tripoli-based NOC control over the region even though its main headquarters were supposed to be located in Benghazi. Calm was restored until Jadhran and his militias launched an attack on the region in June. The extremists set fire to at least three oil tanks in Ras Lanuf. A NOC source said that the fire cost Libya some 700,000 barrels of crude oil.

Most of these tanks were set up by foreign companies decades ago and “it appears that they themselves will fix what was damaged.”

Haftar decided to shift NOC’s base to Benghazi, accusing western leaders of using oil revenues to finance terrorism. He went back on his decision after a plea was made from the Tripoli-based NOC.

Conflict in the South

The conflict over the southwestern oil wealth has been raging between local tribes since the collapse of the Gaddafi regime. These tribes oppose the Barqa and Tripoli monopoly of the majority of Libya’s oil revenues.

The South is suffering from power cuts and fuel shortages despite lying on giant Murzuq basin. Local leaders have sought foreign investment in the area and European companies have been competing to achieve a foothold in there.

Several regional powers have also intervened to ensure the safety of the South, or at least prevent others from accessing the wealth in Fezzan and Sabha. Various rival tribes, including the Awlad-Suleiman, Qadhadhfa, Toubou and Tuareg tribes have long vied for control of the Murzuq basin.

Currently, no major forces, neither from the Tripoli government nor the LNA, are deployed in the South. Tribal clashes often lead the NOC to declare force majeure in any exports from the region.

The Murzuq basin boasts the Sharara field that can produce some 500,000 bpd and El Feel field that can produce 125,000 bpd. The fields were exploited in the 1980s and 1990s by various companies from Britain, Italy, France, Romania, Austria and South Korea. Currently, western powers, including France, Britain and Italy, are vying to to reap the largest share of the region.

Ghadames basin disputes

The Ghadames oil and gas basin lies in northwestern Libya near the border with Algeria. Security reports said that international companies operating in Algeria had sought to invest in the gas field due to its close proximity to its neighbor.

Oil smuggling is rife in the area and black market operators are active there. The revenues from these sales go to armed groups that have free rein in the region.

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