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.