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Abu Dhabi, UAEMonday 22 October 2018

Libya declares force majeure at giant oil terminals

Army-backed state oil company said it has found new buyers in Russia and China

Khalifa Haftar's Libyan National Army ousted rival fighters from Libya's fertile oil crescent region ten days ago/ AFP
Khalifa Haftar's Libyan National Army ousted rival fighters from Libya's fertile oil crescent region ten days ago/ AFP

Libya’s oil industry was operating as two separate parts on Monday after the state oil company declared force majeure at some of the country’s largest oil terminals, which are under the control of a rival faction backed by the Libyan National Army.

The escalating dispute has resulted in exports falling by 850,000 barrels per day (bpd) following the LNA blockade and declarations of force majeure depots, having originally been at just over one million bpd.

The army handed over control of the refineries to a rival oil administration based in the military’s headquarters city of Benghazi and has refused to allow any tankers to leave if they have agreements with the internationally recognised National Oil Corporation, based in the capital Tripoli.

A senior official in the LNA-backed division of the NOC said his administration had already reached preliminary agreements to export oil to Russia and China, among other countries.

“Around 85 per cent of Libya’s oil and facilities are in the territory the LNA control. Eventually companies and countries don’t care who they are dealing with – all they want is this oil. They want stability. We are already in deep conversations with multiple companies and people,” said Abdujalil Mayouf, senior adviser to the head of the LNA-backed NOC.

"Under [LNA chief Field Marshal] Khalifa Haftar we have a strong man and a powerful army who can protect Libya’s most precious resource,” he added.

Haftar’s forces retook two of the largest oil terminals 10 days ago from a rival coalition, led by infamous militia leader Ibrahim Jahdran, that included groups linked to Ansar Al Sharia and Al Qaeda. Oil officials estimated the fallout since the rival groups clashed in the country’s central oil crescent region cost $650 million in damages and lost revenue. However, military, oil and political officials have insisted the step is necessary. Revenues from oil go to the internationally recognised Central Bank of Libya in Tripoli, which is accused of corruption and funding militias the LNA oppose, some allegedly extremist. If exports in LNA territory do restart, revenues will go to the rival CBL it supports in Benghazi.

“I don’t think the international community recognises how isolated the east and south of Libya are. We deserve this money to help our communities. In Tripoli their profits from oil seem to either get lost or end up in the hands of militias who intimidate normal people,” said Mr Mayouf.

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Many have praised the NOC for bringing exports back to over the one million bpd mark, but others question where the money has gone. The NOC in Tripoli has since said the LNA’s decision will “have significant short and long-term consequences for NOC affiliate companies, the national economy and the Libyan people”.

Last week, Field Marshal Haftar said the move was necessary to protect Libya’s oil facilities from further damage and to prevent any more money ending up in the hands of “terrorists”. From 2013-16 Jahdran blockaded the oil crescent region himself and attempted to sell oil, a move officials said cost Libya $100 billion. When the LNA captured the area in 2016, initially they handed over day-to-day running to the Tripoli and international recognised NOC. However, their patience appears to have waned.

“For over a year the state oil company in Tripoli was allowed to take revenues. We allowed them to operate it but there was no improvement in the lives of normal people. Libya needed a change and my colleagues have the expertise to do it,” said Mr Mayouf.

Meanwhile the whereabouts of Jadhran are unclear since he fled the fighting 10 days ago. Senior political sources in the western city of Misrata said he was in the city last week under the protection of fighters loyal to the radical former Grand Mufti Sheikh Sadiq Al Ghariani. Since then, rumours Jahdran had gone to Turkey to gather allies for fresh attacks on the LNA are unconfirmed.