Libya oil exports grind to halt in political tussle

Libya oil exports grind to halt in political tussle
This file photo taken on April 09, 2014 A general view taken on April 9, 2014 shows the oil terminal of Marsa Al-Hariga. (AFP)
Updated 02 July 2018

Libya oil exports grind to halt in political tussle

Libya oil exports grind to halt in political tussle

TRIPOLI: Libya’s crucial oil exports from its production heartland ground to a halt Monday in a financial showdown between the country’s rival political administrations.
The crisis has slashed production, previously estimated at one million barrels per day, by 850,000 bpd, said the National Oil Corporation run by the Tripoli-based Government of National Accord (GNA).
The NOC said all exports have been suspended from the oil crescent in northeast Libya after operations were frozen at the terminals of Al-Hariga and Zweitina.
Exports from the region’s two other ports, Ras Lanuf and Al-Sidra — seized from a rival militia by military strongman Khalifa Haftar’s self-styled Libyan National Army (LNA) — were already suspended on June 14.
The NOC declared force majeure on crude oil loadings at the ports, a status that frees parties to a contract from their obligations due to circumstances beyond their control.
The suspension amounts to a $67.4 million a day loss in Libya’s heavily oil-dependent public revenues, according to the NOC.
Libya has been wracked by chaos since the 2011 NATO-backed uprising that toppled and killed long-time dictator Muammar Qaddafi, with two rival authorities vying for control.
The LNA recaptured the terminals in June after they were seized by armed groups led by militia leader Ibrahim Jadhran, who had controlled them from 2011 to 2016.
Haftar’s forces said they would hand the installations and their revenues to an eastern administration that rivals the UN-backed GNA in the capital.
It warned that “no tanker will be allowed to dock” in the ports without permission from a Benghazi-based rival NOC.
But the GNA last week urged the United Nations to block any “illegal” oil exports, and the NOC in Tripoli said Monday it was the “only recognized Libyan entity” responsible for oil production and exports.
“Despite our warnings of the consequences and attempts to reason with the LNA general command, two legitimate allocations were blocked from loading at Al-Hariga and Zweitina this weekend,” said NOC chairman Mustafa Sanallah.
“The storage tanks are full and production will now go offline.”
In the statement, the NOC called on Haftar’s forces to lift their blockade, saying losses to the public purse “since the attack on Al-Sidra and Ras Lanuf... by Ibrahim Jadhran is more than $650 million.”
Libya produced 1.6 million bpd of oil before Qaddafi’s ouster in February 2011. Production fell by about 20 percent after the revolution, before recovering to one million bpd by the end of 2017.
The NOC, under a UN resolution, has been in charge of managing the oil crescent and export revenues, even though Haftar’s LNA took over control of the region in 2016.
The revenues are transferred to the GNA-affiliated central bank which is tasked with distributing the funds to “all regions and administrations,” including zones under the control of the eastern authorities.
According to sources close to the administration in eastern Libya, its aim is to win political concessions from the GNA, notably to dismiss the bank’s governor, Seddik Al-Kebir, accused of financing rival forces.
The showdown come barely a month after the rival camps agreed at a meeting in Paris to hold nationwide elections in December and to unify their institutions.