Libya misses out on oil price boom as political divide continues
Oil and gas prices may be booming across the globe, but Libya, despite an abundance of oil, is not benefitting
The country’s oil sector, the main driver of the country’s economy, has once again been hampered by the political division and instability that continues to plague the country.
On April 18, Libya’s National Oil Corporation (NOC) announced a state of force majeure – meaning that it was declaring itself unable to fulfil contracts, and warned of a “painful wave of closures”, after forces in eastern Libya prevented staff at the Zueitina oil terminal from entering the building. That was followed by another suspension of operations at the Brega terminal the following day.
The Zueitina oil terminal alone accounts for almost a quarter of the 1.2 million barrels of oil Libya produces per day.
The incident at Zueitina, and the ensuing shutdown of such an important element of the economy, reflects the difficult and precarious situation Libya finds itself in, as two rival administrations vie for the right to govern the country.
Libya’s parliament, the House of Representatives, claims that the term of Abdul Hamid Dbeibah, the prime minister of the UN-recognised Government of National Unity, has ended, and that the man they have sworn in, Fathi Bashagha, should now be prime minister.
“The closure of the oil terminals and ports is an attempt by [military commander Khalifa] Haftar and his allies to force through the House of Representatives’ roadmap, and more specifically, to topple the Government of National Unity in Tripoli and impose their parallel government led by Fathi Bashagha,” said Yousef Bakhbakhi, a Tripoli-based academic and political analyst, referring to Haftar, the head of the Libyan National Army militia, and the most prominent military player in the east of Libya.
Mohamed Eljarh, a Libyan political analyst, concurred that the blockades in the oil sector were being driven by political tensions and considerations.
“Opponents of the Government of National Unity Prime Minister Dbeibah are concerned that he will use oil and gas revenues [$6bn of which was recently transferred by the NOC to the Central Bank of Libya in Tripoli on April 14] to buy more time for himself and buy support from the armed groups in western Libya,” Eljarh told Al Jazeera.
“The camp that supports Bashagha hopes that the shutdown of oil and gas production will speed up the ousting of Dbeibah and his government from Tripoli,” Eljarh added.
Eastern forces ‘frustrated’
This is not the first time that the oil sector has fallen victim to political tensions between Libya’s factions.
In July 2019, the NOC declared force majeure, after Libya’s largest oil field, El Shahara, was shut down by militias as part of Haftar’s bid to squeeze Tripoli during his offensive on the capital. The offensive ultimately failed after a Turkish intervention to support the GNU in early 2020.
Libya has the largest oil reserves in Africa, and oil revenues are vital to the functioning of the Libyan economy.
Many of the key oil terminals and ports are located in the east, which remains under the de facto control of forces loyal to Haftar. However, experts suggest that the latest blockade reflects the frustration of Haftar and his allies more than their strength.
“[Despite the vote by the House of Representatives on Bashagha’s government], Dbeibah still has the support of influential international powers,” said Libyan academic and commentator Ahmed Mayouf. “Bashagha has found it difficult to enter the capital, Tripoli, since he declared himself the new prime minister in March, and this is what has pushed him and his allies to take a tougher approach against the Government of National Unity.
“Bashagha’s government has taken over government buildings in the eastern city of Benghazi and southern city of Sebha, with the support of Haftar’s forces that are in control of these cities,” Mayouf added.
Bashagha held his first cabinet meeting in Sebha on Thursday, and appeared to soften his assertion that he would enter Tripoli, by suggesting it was not a priority.
Despite the lack of international backing Bashagha has received, Dbeibah may still not be entirely comfortable with his own level of international support.
Dbeibah’s visit last week to neighbouring Algeria, which has now come out in favour of the GNU, was “perhaps part of a strategy to establish a counterbalance to Egypt’s strong support for Bashagha’s parallel government”, according to Bakhbakhi.
In mid-April, Cairo hosted representatives from Libya’s High Council of State and the House of Representatives for talks that spanned five days, and which were attended by the United Nations Special Representative for Libya Stephanie Williams.
The talks are expected to resume next month, as the UN pushes for a consensus and a constitutional framework that can serve as a basis for holding elections.
With soaring energy prices exacerbated by the war in Ukraine, questions remain over whether the oil blockade in Libya will have implications for international efforts to facilitate a political deal.
“[The oil blockade] will only encourage the international community to press for elections that Bashagha and his allies do not want to see take place,” said Bakhbakhi. “The tactics of Bashagha and his allies will also reinforce the belief that elections are the only realistic solution that might bring about some form of political stability in Libya.”
Eljarh, on the other hand, suggested that pressure may not necessarily result in the lifting of the blockade, and that Bashagha may decide to go ahead without the blessing of the international community.
“The timing of the oil blockade puts the coalition led by Fathi Bashagha in a bad light given the global energy crisis resulting from the war in Ukraine,” Eljarh said. “[However, Bashagha and his allies] have had enough with the international community and have decided to embark on more decisive action in order to oust Dbeibah and his government.”
Read the full article at: aljazeera.com