noc - lost oil revenues stand at over $2.1 bil; tobruk govt fm - cannot force lna-linked tribesmen to lift oil blockade
Lost oil revenues from Libyan oil exports are estimated at over $2.1 billion, as the LNA blockade on ports and pipelines continues. Current production, according to the National Oil Corporation, has dropped to 122,430 bpd, down from around 1.2 million bpd just a month ago.
The foreign minister for the Eastern Tobruk-based government, Abdulhadi Lahweej said his government cannot force the LNA-linked tribesmen to lift the blockade as it is a “popular decision”. Haftar and the Tobruk government have long claimed that Tripoli does not share the revenues equally with LNA held territory, given that the NOC and Central Bank are situated there.
Lahweej further claimed the GNA was using oil revenues to pay for Syrian mercenaries, brought by Turkey, to fight against the LNA. Responding to al-Sarraj’s calling Haftar a “war criminal” at the UN, Lahweej said “The war criminal is the one who accepts mercenaries to kill people and accepts pilots who kills civilians," referring to al-Sarraj himself.
Libya's GNA foreign minister, Mohammed Syala, took aim at the international community over its inaction and silence in the face of Haftar's ongoing blockade of Libyan oil exports, claiming this is to keep up global oil prices.
Speaking to the press at the UN in Geneva, Syala said that the GNA is "astonished at the...inaction" of the international community. "They...don't want one million barrels of (Libyan) oil to bring down prices now that international demand is low. If this is the reason, its inhuman".
Libya's economy is heavily reliant on crude oil exports, which comprise nearly all of its national income. However, days prior to the launch of the Berlin peace talks in January of 202, Haftar-linked tribal elements seized and shut down most of Libya's export capacity, which is based in LNA-held territory, dropping Libyan production from around 1.2 mil bpd to under 200,000 bpd. Haftar claims this is to force the GNA to more evenly distribute oil income. That is, since even though eastern Libya produces most of Libya's oil output, the revenues are brought in through the Tripoli-based National Oil Corporation and Central Bank. The GNA insists Haftar is using this to gain leverage in the negotiations.
National Oil Corporation (NOC) called for "urgent U.S. intervention to help" end the oil crisis in Libya. NOC Chair Mustafa Sanalla delivered this message when meeting American Ambassador to Libya Richard Norland in Tunisia last Wednesday.
Sanalla said he discussed the economic and humanitarian impact of the ongoing oil blockade by LNA-linked tribes, as well as the LNA airstrikes on the port of Tripoli recently. According to Sanallah, "the Libyan economy is sliding into a crisis and more Libyans are suffering. (the) attack on the port of Tripoli is totally unacceptable. Hospitals, schools and public services are experiencing power and fuel shortages due to the actions of those who seek to divide Libya."
He added that NOC is doing what it can to reach a sustainable solution for an end to the violence. Sanallah's statement claimed that the U.S. ambassador expressed the White House's deep concern over the attacks (Feb 18) on the port, which prevented the deliveries of fuel for civilian use.
Sanallah is "hopeful that the U.S. will continue their efforts to broker peace so that Libya's economy can slowly rebuild and work towards prosperity for all Libyan people. We urgently need U.S. leadership to help end the oil embargo... to prevent major damage to the national infrastructure."
The damage goes well beyond the near-term losses although they are significant to the war torn country. Production is currently down to just under 136,000 barrels per day (bpd), a loss so far of over $1.6 billion (since Jan. 18). The production levels were around 164,000 bpd until last week and over 1.2 million bpd prior to the blockade.
GNA prime minister al-Sarraj warns of a coming financial and budgetary crisis for 2020 if Haftar's oil blockade continues.
Haftar-aligned forces shut down all oil terminals in the territory they control on January 18th, as a show of force and in order to pressure the GNA to share oil revenues more equitably with the Tobruk eastern government. Haftar and his backers claim that although the east produces most of Libya's oil, they see little of the revenue. That is, since the National Oil Corporation and Central Bank, the only actors who deal in Libyan oil and collect the revenues, are based in Tripoli, even if they are neutral bodies.
Losses to date have exceeded $1.4 billion, with over $50 million in losses for ever day the blockade continues. That does not take into account the long-term damage the blockade causes the infrastructure.
Libya's National Oil Corporation reports that production has plummeted to around 164,000 barrels per day, from a pre-blockade level of around 1.2 million bpd. Given that oil production is Libya's main source of income, this could have serious consequences for the country's stability, beyond the current fighting.
GNA Foreign Minister Mohamed Siyala expressed Libya’s desire to bring Chinese companies back and for China to reopen its Tripoli embassy. Siyala met with an assistant Chinese foreign minister on the sidelines of the African Union summit in Ethiopia. For his part, the Chinese official expressed a willingness to strengthen relations. He noted that China only recognises the GNA and will not cooperate with parallel governmental or economic institutions in eastern Libya.
Oil has become the new conflict in Libya’s ongoing civil war. Since January 18, the day before the Berlin conference, and as we have reported multiple times, Haftar ordered his forces to halt oil exports from all terminals under his control, specifically from Hariga, Brega, Ras Lanuf, Zueitina and Es Sider.
One of the militia leaders undertaking this task told AFP that the closure is “designed to dry up the sources of terrorism financing”. The GNA in Tripoli currently collects all of Libya’s official oil revenues, even though most of it is exported through the East. The revenues are collected and distributed through the NOC – National Oil Corporation and Central Bank. The Eastern Tobruk government claims it does not receive a fair distribution of the revenues, spurring their move to shut down all exports until this is adjusted.
GNA Prime Minister al-Sarraj has so far rejected these demands, claiming the move is meant to pressure the GNA into collapsing, a claim affirmed by some LNA tribal leaders. The UN sponsored an oil and economic centred meeting in Tunis in early January to try and sort out some of these issues. There was also hope that the Berlin meeting and UN sponsored process might also establish a mechanism to more fairly distributed the oil revenues.
As of February 4, Bloomberg reports that production has dropped to only 200,000 barrels per day (bpd), from a height of 1.3 million bpd, the lowest levels since Gaddafi’s overthrow in 2011. This amounts to a loss of between half a million to a million barrels a day in losses, or around $55 million. NOC Chair Mustaffa Sanalla warns this could totally bring down Libya’s oil production if it continues, as the stoppages cause damage to the pumping and refining infrastructure.
In the short and midterm, it doesn’t seem that either side is willing to back down. It is here that the international community must intervene to prevent continued hardships for the Libyan people and irreversible damage to Libya’s oil infrastructure, which could severely harm the economy and growth prospects post conflict. Otherwise, there might not be another option than giving in to Haftar’s demands and negotiating a more equitable revenue sharing agreement between the sides.
Although the world’s attention is focused on reaching a truce at this time, it might be preferable to shift the focus to ending the oil blockade as a first step in bringing the conflict to an end.