The Address | Benghazi – Libya
LIBYA – Two suicide bombers fought their way into the National Oil Corporation’s (NOC) glass-fronted downtown headquarters in Tripoli on 10 September, spraying corridors with gunfire and killing two staff, with another 10 wounded, Petroleum Economist reported.
NOC Chairman Mustafa Sanallah escaped from the building during the fighting, which saw both terrorists killed. He later issued a statement underlining the vulnerability of the industry to a terrorist onslaught: “This attack did not cause a loss of production. However, it led to the shedding of Libyan blood. This attack is indicative of the weakness and fragility of the security arrangements in the country.”
The attack came hard on the heels of nine days of fighting that raged across Tripoli, as local militias fought with an out-of-town militia, the self-styled 7th brigade, for city real estate. That fighting saw the UK urge its citizens to leave immediately and Italian energy giant Eni evacuate staff by chartered ship.
This violence came just as the NOC was celebrating a string of successes. Earlier in the month it announced that its production target of 1.3m barrels a day, set two years ago, was met in February. Better yet, oil and gas revenue hit $13.6bn for the first six months of the year, higher than the $13bn for the whole of 2017. The news breathed life into NOC plans to raise production beyond the 1.6m b/d it enjoyed before the 2011 revolution to 2.2m b/d by 2023. Technically, the target is possible, given Libya holds 48.4bn barrels, Africa’s largest reserves.
Just as important, outside powers are finally backing Sanallah in the tough line he has advocated against militias interfering with oil production.
The UN and US both announced financial sanctions and a travel ban on Libya’s most powerful militia leader, Ibrahim Jathran, head of the self-styled Petroleum Facilities Guard. Jathran blockaded four central oil ports, including Es Sider, Libya’s largest, for three years from 2013, demanding hefty payments to allow the oil to flow.
Together, the ports serve the Sirte Basin, home to two thirds of Libya’s oil output. In September 2016, Jathran was pushed out of the ports by the eastern Libyan National Army (LNA) of Khalifa Haftar, but has since launched two attacks to try to retake them. In March last year, his forces held the ports for a week before the LNA recaptured them. His latest attack, in June, was more substantial, with Chadian mercenaries and Islamists supplementing his own men in a force with more than 300 vehicles. After holding Es Sider and nearby Ras Lanuf for a week, he was again pushed back by the LNA, thanks to its monopoly of air power.
Jathran’s latest attack prompted the LNA to have a rethink. The army accuses the Central Bank of Libya, which receives Libyan oil revenues, of financing Jathran, and reasons that the more oil eastern Libya exports, the stronger he’ll become. So, after recapturing the ports, the LNA announced they were being transferred from the NOC to a rival authority in eastern Libya.
The NOC reacted by closing the ports and production plummeted by 850,000 b/d. Eastern Libya tried to sell Sirte Basin oil independently, but the UN declared the move illegal. The Trump administration, keen to keep Libyan oil on the market to offset price increases from Iran sanctions, then persuaded LNA allies Egypt and UAE to pressure Haftar to reconsider.
In July, the LNA relented, handing the ports back to the NOC, but only after the UN promised a commission to examine the Central Bank accounts and make public any payments to militia, including those to Jathran.
NOC shows resolve
Sanallah’s hard line on militias has borne fruit on a second front. In February, another Petroleum Facilities Guard militia-there are at least three-closed El Feel, an 80,000-b/d joint Eni/NOC field in south-west Libya, demanding payment for hundreds of people with no connection to the facility. The NOC refused to negotiate, and after a four-month blockade the PFG climbed down and El Feel reopened.
The NOC’s other target is petrol smuggling. The extent of Libya’s fuel smuggling was laid bare in September by a report by the UN Panel of Experts. Lacking refinery capacity, Libya spends $3.3bn a year importing petrol and refined products, much of it from Italy. Petrol arrives in Zawiya, Libya’s largest western oil port, where militias steal much of it and smuggle it back to Italy via Malta using a fleet of 70 boats.
Italian police have begun investigating the Italian end of the smuggling operation, with one source close to the NOC telling Petroleum Economist that up to 9% of gasoline sold in Italian petrol stations is smuggled from Libya. In June the UN and US imposed sanctions on six Zawiya migrant smugglers, including the local petroleum guard chief, who was also implicated in fuel smuggling, according to Petroleum Economist.
However, the NOC’s incremental progress in raising production and undermining the militias may be cancelled out, both by Islamic State attacks and the worsening civil war.
Many assumed IS had been vanquished from Libya after its self-declared caliphate, around the coastal town of Sirte, was crushed in 2016 by militias aided by US air power. But Libya’s chaos has allowed the group to reform in bases deep in the Sahara, despite continuing US air strikes.
The immediate effect of these attacks is a reported evacuation of foreign engineering staff. Oil services firm Schlumberger, which returned to Libya in 2017 after a three-year hiatus, announced plans earlier this year to up its presence. The NOC needs its expertise to repair facilities across the Sirte Basin and officials worry company bosses may decide Libya is now too dangerous. The country’s credibility with international oil companies became shaky after it tried to block Total buying Marathon 16.33% stake in a joint-venture company, Waha. Talks to resolve the dispute are ongoing.
Outside powers hope that Libya’s chaos will be eliminated by elections for a new, united, government to end the east-west split between Libya’s UN-backed Government of National Accord (GNA) in Tripoli and its rival House of Representatives parliament in Tobruk. In May, talks in Paris hosted by French president Emmanuel Macron saw key Libyan leaders set December as the election date. But preparations are lagging, and the surge of recent violence has seen UN envoy Ghassan Salamé suggest that the election might be scrubbed, Petroleum Economist said.
Without elections, the civil war may escalate. Haftar, who supports the Tobruk parliament, has declared his intention to march on Tripoli and rid it of militias, and he enjoys public support. An opinion poll by USAID shows that the LNA is Libya’s most popular institution, its 68% support eclipsing both parliament, on 40%, and the GNA with just 15%. But while a majority of Libyans want the LNA to rid the country of militias and restore order, an offensive on the capital risks a bloodbath.