International tensions rise over control of Libyan oil terminals

For many Libyans, the willingness to pay what in many cases are private armies to keep the peace and not cause problems perpetuates the country’s woes.
Sunday 01/07/2018
The building housing Libya’s oil state energy firm, the National Oil Corporation (NOC), in Tripoli. (Reuters)
The building housing Libya’s oil state energy firm, the National Oil Corporation (NOC), in Tripoli. (Reuters)

In September 2016, after the Libyan National Army (LNA) captured the country’s eastern oil terminals of Ras Lanuf and Sidra from Ibrahim Jadhran, the Petroleum Defence Guards commander who was supposed to protect them but instead kept them closed for three years, Field-Marshal Khalifa Haftar immediately handed them over to the country’s National Oil Corporation (NOC) in Tripoli to get oil exports flowing through them again.

Given the divisions in Libya and the fact that the LNA is officially part of the eastern-based political establishment, which has its own parallel oil corporation in Benghazi, it was considered a very shrewd move and it gained Haftar a lot of political goodwill internationally.

It was also the obvious move: The United Nations had made it clear that no one other than the Tripoli-based NOC would be allowed to export oil from Libya. That was made clear in March 2014 when Jadhran tried to export a consignment of oil and the tanker involved, the MV Morning Glory, was seized by the US Navy.

In June, the two terminals were recaptured by Jadhran, backed this time by the quasi-Islamist Benghazi Defence Brigades and, allegedly, Chadian Tebu mercenaries. From the outset, there was never doubt the LNA would retake them. It took just a week.

What came as a shock to many Libyans and the international community was Haftar’s decision to hand them, not to the official NOC, but to the internationally rejected Benghazi parallel body. It was unacceptable, his spokesman said, that Libyan oil income should be used to pay terrorists and those the LNA was fighting against.

The fact that the salaries of all the various rival military groups in the country are paid by the state because all have been registered at some point as official by one government ministry or another is at the heart of Libya’s problems.

For many Libyans and outside observers, the willingness to pay what in many cases are private armies to keep the peace and not cause problems perpetuates the country’s woes. They see them as no more than mafias. Even in Tripoli, there is considerable support for Haftar’s view that this must end.

Nonetheless, his move has put him on a collision course with many in the international community, including governments that either secretly or openly support him. It also threatens to slash Libya’s oil exports, to further weaken the country’s currency and fuel inflation, thus making Libyans’ lives even more miserable.

The move was angrily condemned in a statement by the United States, the United Kingdom, France and Italy, which said the terminals must be handed back to the official NOC and that anyone trying to circumvent UN Security Council sanctions on Libya will be held to account. That clearly includes Haftar.

The French have particular reason to be angry: The deal announced in Paris at the end of May, mentored by President Emmanuel Macron, in which Haftar verbally approved, as did Presidency Council head Fayez al-Sarraj along with the presidents of Libya’s House of Representatives and its State Council, specifically said that there had to be an end to all parallel institutions and that the NOCs must be united.

Although the four did not specifically say that they would take over tankers exporting oil without the approval of the official NOC, as happened with the Morning Glory in 2014, there is little doubt they would. The European Union has specifically said it would counter any attempt to trade Libyan oil outside the internationally recognised official channels.”

No international oil purchasers or oil tanker companies are going to want to get involved in deals viewed as illegal. The only terminal they can now deal with is Zawia, west of Tripoli, still under the control of the official NOC. The result is that Libya’s oil exports, averaging about 1 million barrels per day (bpd) until Jadhran seized Ras Lanuf and Sidra, will plummet to less than 230,000 bpd ­— the most Zawia can handle.

Apart from alienating key members of the international community, two of which — France and the United States — had been seen as sympathetic to him, Haftar’s decision does not answer the fundamental problem that he has raised: state money being used to fund warring militias.

The NOC does not hand out any money to anyone. Oil revenues go straight to the Central Bank of Libya, which makes the payments based on government budgets.

Some Haftar apologists are suggesting the decision to hand over the terminals was a bargaining ploy to pressure the international community to replace central bank Governor Saddek Elkabir with Mohamed Shukri, whom Haftar’s allies in the House of Representatives want in the job. The international community’s view is that this is a decision that the House of Representatives and the State Council must make.

Unless the NOCs can agree to work together, oil flows will dwindle and with them state funds and there is little sign that the two NOCs have any intention of cooperating.

Members of the Libyan National Army (LNA) gather near Sidra oil port in Ras Lanuf, on June 21. (Reuters)
Members of the Libyan National Army (LNA) gather near Sidra oil port in Ras Lanuf, on June 21. (Reuters)
11