By Leo Kabouche
The recent turmoil in Libya’s Oil Crescent – a region which stretches along the coast from Sirte to Ras Lanuf, and which extends down to the Jufra district – has underscored the competition for the control of state revenues, as Field Marshal Khalifa Haftar’s Libya National Army (LNA) has intensified its attempts to seize key national institutions ahead of the December 2018 presidential elections.
The capture of oil fields by militias
Although an important development, the NOC reunification itself was not sufficient to ensure the revival of oil production. In early March 2012, leaders from the eastern region of Cyrenaica (or Barqa in Arabic) elected a regional governing council and issued a declaration of semi-autonomy from the government in Tripoli.
The separatist push posed an immediate threat to the functioning of the oil industry, as Cyrenaica holds 60 percent of Libya’s crude reserves and boasts both the major sea port of Sirte and Benghazi, the country’s second largest city.
The movement was led by Ibrahim al-Jathran, a former rebel fighter who commanded the “Hamza” brigade during the uprising against Gaddafi, which fought along the coast from Ajdabiyah to the Gaddafi’s homeland Sirte area.
Often referred to as a federalist, al-Jathran can be better described a political pragmatist, who has alternately allied himself with both the HoR and the western authorities in Tripoli.
Determined in his struggle for Cyrenaica’s autonomy, al-Jathran used the region’s large oil manna as a means of exerting political pressure on Tripoli. He took the helm of the Petroleum Facilities Guard (PFG), once one of the most prominent militias in the east, which in its heyday comprised over 20,000 fighters.
In mid-2013, PFG forces seized the oil fields of Es-Sider and Ras Lanuf, the largest and second largest terminals in the country, blocking sales worth at least $5 billion.
In the aftermaths of the seizure, al-Jathran threatened to declare independence if the government refused to give eastern Libya more autonomy over oil revenues.
He even authorized the sailing of a tanker loaded with $16 million of crude oil from the eastern port of Sidra under the North Korean flag, although the ship was promptly taken over by the American navy Seals.
With the PFG operating key oilfields in the east, oil production fluctuated significantly between 2013 and 2016, with a peak at 600,000 barrels per day (bpd) in March 2015, which is way below pre-conflict levels of 1.6 million bpd.
Despite the signing of the LPA in December 2015, authorities in Tripoli did not manage to retake control of the oil facilities. This offered a strategic opportunity to Haftar’s LNA, which had started to conduct an anti-Islamist campaign in the area around Benghazi, with the support of Persian Gulf monarchies keen to see the political influence of Islamists diminished throughout the region.
In September 2016, LNA troops launched an assault against the PFG factions in the Oil Crescent, gaining effective control over the Es-Sider, Ras Lanuf and Zueitina fields. During the same offensive, Haftar’s forces also gained control of the 60,000 bpd Marsa el-Brega port.
Following the clashes, a unit of the PFG lifted a two-year blockade on the pipelines connecting the 330,000 bpd Sahara field to Libya’s Zawiya refinery, and the El-Feel field to the Mellitah complex. In January 2017, the NOC announced the lifting of a “self-imposed moratorium” on foreign investment in the oil sector which had been in place since 2011.
Production quickly rose to 1 million bpd in July 2017, reflecting the LNA’s success at gaining control over oil facilities from the PFG.
The resumption of operations at Libya’s largest fields attracted international attention, with oil majors making prudent return to the country. In February 2017, Russia’s Rosneft signed supply and cooperation agreements with the NOC, although no details on the offtake deal were provided.
A few months later, US oilfield services company Schlumberger said it would resume joint operations with Libyan Sirte Company. Even French energy company Total expanded its operations in Libya, with the purchase of a 16.33 percent stake in Libya’s Waha concessions from U.S. Marathon Oil.
However, security threats from various armed groups and local militias remain, deterring most international firms from re-entering Libya’s oil sector.
Renewed insecurity in the Oil Crescent
The brief lull in the Oil Crescent did not last long: on June 14 this year, militants of the BDB seized the Ras Lanuf and Es-Sider export terminals.
BDB forces — included mercenaries recruited from southern Libya, Chad and Sudan — carried out the attack under the command of al-Jathran. The two terminals were recaptured by forces from Haftar’s LNA on June 21, with suspected air support from the United Arab Emirates (UAE).
According to Mustafa Sanalla, the head of the NOC, the clashes led to a production loss of 450,000 barrels per day (bpd). Three oil storage tanks were set on fire, causing damage the NOC has said will take years to repair.
The BDB’s latest offensive reflects a strategic military error from Marshal Haftar, who left the Oil Crescent lightly defended and focused more on other conquests in the east.
Although the fields were quickly retook by the LNA, Haftar refused to hand back the control of the terminals to the Tripoli-based NOC. On June 25 — in what was perceived as a political gamble from the Marshal — LNA’s spokesman Ahmed Al-Mismari announced that the self-styled army would hand over control of the ports to the rival NOC in Benghazi, which remains active despite the 2016 reunification.
Al-Mismari argued that the decision was aimed at preventing “terrorists” from receiving salaries generated by oil revenues via the Central Bank of Libya (CBL), which pays salaries to a wide range of Libyan militias, as thousands of militiamen have been added to the state payroll since the collapse of the Jamahiriya regime.
The move was quickly denounced as illegal by the western NOC and the international community. On June 25, chairman of the western NOC Mustafa Sanala declared force majeure on Ras Lanuf and Es-Sider port terminals, a decision extended to el-Hariga and Zueitina on July 2.
The U.S. Embassy in Libya also issued a joint statement signed by the governments of France, Italy and the United Kingdom, reasserting that Libyan resources “must remain under the exclusive control of the legitimate National Oil Corporation.”
Most specifically, the statement outlined that if the eastern NOC attempts to market the oil, it would violate UN Security Council Resolutions 2259, 2278 and 2362, which affirm that oil resources must be operated and sold under the sole authority of the GNA.
Haftar’s move is above all a political gamble, as the Marshal now holds all of the most valuable cards since the takeover of Derna, and figures to play a central role in any unified national administration following next December’s presidential and parliamentary elections.
In challenging the Tripoli-based administration over the control of oil income, Haftar aimed at bolstering his legitimacy towards the Oil Crescent’s population.
The region is home to numerous tribes with significant political influence, including the Magharba tribe, whose leaders have expressed discontent with the LNA for failing to improve their standard of living and security, and did not join Haftar’s effort to push back the BDB’s factions.
The Marshal seems to have successfully positioned himself as the champion in the fight against widespread corruption, with his move receiving statements of support from local political bodies in the Sirte basin, in areas such as Jalou, Awjala and Ejkherra.
Besides this charm offensive with local tribes, another of Haftar’s goals is to ensure stable funding for the LNA, which currently relies on Gulf Monarchies to finance its military and political campaigns.
Indeed, in a statement issued by the LNA’s general command on July 4, Haftar set five prerequisites for the reopening of the oil ports, the first one being the replacement of the current CBL governor, Sadiq al-Kabir.
Haftar has long wanted to appoint a new head for the CBL, accusing al-Kabir of favoring western Libya and the Tripoli-based administration.
Highlighting the controversy over al-Kabir, in December 2017 the HoR elected Mohamed al-Shokry as governor of the CBL, in an attempt to unseat al-Kabir. However, Shokry’s appointment was not accepted by the international community and the GNA, and was never followed through.
An Haftar-affiliated figure at the head of the CBL would most surely favor the LNA Authority for Investment and Public Works, which is modeled on the Egyptian army’s involvement and ownership in the Egyptian economy.
Haftar eventually handed over the ports to the Tripoli-based NOC, which resumed production and export operations on July 11, 2018. However, this episode has fueled the long-standing tensions over the Oil Crescent, with western militias bitterly opposed to any form of cooperation with Haftar.
This was highlighted by their expressed rejection of the May Paris conference, which brought together Haftar, GNA Prime Minister al-Sarraj, and HoR head Aguila Saleh. Among those militias, the powerful Qatar-backed Misrata Military Council (MMC) is Haftar’s fiercest opponent, and will use all means at its disposal to stop the Marshal’s rise to power.
In this context, there is a possibility that MMC’s factions might embark on large offensive over the Oil Crescent, with the ultimate goal of bringing the region under the Tripoli-based NOC’s exclusive control.
Renewed clashes at Libya’s main oilfields would have a catastrophic impact on the country’s economy, as oil revenues accounted for more than 93 percent of the GNA’s total income in the first six months of 2018.
Five months ahead of crucial elections for the country’s future, one certainty remains: the battle for Libya’s Oil Crescent is far from over.
Leo Kabouche – International affairs and political science graduate with experience in risk management and business development.