By Chris Stephen

A new offensive by militias to capture Libya’s eastern oilfields has set back the state oil company’s hopes that foreign firms will return to the country’s upstream – and creates new doubts about its ability to sustain an oil-output recovery.

The Benghazi Defence Brigades, originally from Benghazi and now occupying the central towns of Houn and Waddan, launched an offensive on 9 February against the Libyan National Army (LNA), which has since September controlled the Sirte Basin, the prolific heartland of Libya’s oil sector.

The attack was beaten back before it got underway by a wave of LNA air and helicopter strikes. The forces, under the control of eastern general Khalifa Haftar, claimed to have destroyed 40 vehicles, but lost a helicopter in the process. The LNA also repulsed an attack late last year.

Despite Libya’s worsening civil war, oil production stands at more than 0.7m barrels a day, its highest level in nearly three years. Output capacity before the revolution against Muammar Qadhafi in 2011 was 1.6m b/d. National Oil Corporation (NOC) has talked of raising production to 1.2m b/d this year.

Recent output gains have been possible because of Haftar’s capture of four oil ports serving the Sirte Basin. The LNA afterwards handed the terminals, and infrastructure connecting them to the basin’s fields, to the NOC.

But the conflict is deepening and renewed targeting of energy installations cannot be ruled out. As well as battling Islamist forces at Houn and Waddan, Haftar’s Operation Dignity, a coalition of LNA and tribal militias allied with the Tobruk-based House of Representatives (HoR), continues to fight against Libya Dawn, an Islamist-Misratan coalition whose militias also hold Tripoli.

Libya Dawn politicians form a majority in the UN-appointed Government of National Accord (GNA) in Tripoli. Two pro-Tobruk members of the GNA’s nine-strong presidency continue to boycott the unity government, and a third has resigned, disrupting what the UN once hoped would be a finely balanced presidency representing all Libya’s factions.

Tobruk’s HoR refuses to recognise the GNA and has its own interim government. That has created a political paradox at the heart of Libya’s chaos. While Tobruk-allied forces control the territory accounting for two-thirds of the country’s oil, the GNA, by dint of UN Security Council recognition, is the body authorised to sell it and disburse the proceeds.

“The LNA has its hands on the taps,” said Mustafa Sanallah, chairman of NOC, recently. “And the GNA has [UN Security Council resolutions] 2259 and 2278. Each side has one key to the treasure room, but both keys are needed to open the door.”

IOC exodus

Sanallah has made it his mission to open that door, insisting he is above politics, and holding a blizzard of meetings to persuade foreign firms to return to a country most fled when civil war erupted in 2014. He has also pled that the GNA’s leadership release funds back to NOC to pay for much-needed remedial work on damaged energy infrastructure.

In January, Sanallah was in London to meet partners of Waha Oil Company, an NOC joint venture with US firms ConocoPhillips, Hess, and Marathon Oil, which has restored 50,000 b/d of its original 350,000 b/d production at five Sirte Basin fields.

Days later he held talks with Spain’s Repsol, an NOC partner in the key southwestern Sharara field and Germany’s Wintershall, which is producing 35,000 b/d from its Sirte Basin fields.

Sharara and the nearby El Feel field, operated by an NOC-Eni joint venture, are now able to begin exporting oil to terminals west of Tripoli, after militias blocking the fields agreed to their restart. Sharara’s output has reached about 170,000 b/d, or around half its 2011 capacity. El Feel has yet to begin pumping.

But many foreign firms remain nervous. Tanker operators remain gun-shy and their insurers are demanding large premiums to cover the risk. On 13 February, two days after NOC publicised the first shipment by subsidiary Mellitah Oil and Gas from a new vessel above the offshore Bouri field, Tripoli’s most powerful pro-GNA militia, Rada, arrested several executives from Mellitah, a joint venture with Eni.

“Tanker operators are going to be wary due to previous oil threats,” said Lisa Ward, co-founder of, a new open-data surveyor of oil shipments. “In previous situations tankers have been prevented from loadings due to local power struggles.”

The GNA, in Tripoli only with the approval of militias that control the capital, is also wobbling. It has been unable to establish its authority beyond the capital and Hafter’s ascendency on the ground is bringing a shift in the diplomatic stance of Western powers.

Libya’s Islamist and Misratan militias also now fear the loss of US support, despite having allied with American forces to oust Islamic State from Sirte. This has prompted some of them to form a new group, the National Guard, supporting yet another rival government, the National Salvation Government. Street battles in Tripoli between these factions have only escalated.

It all makes hopes for a swift end to Libya’s political dysfunction – and a return of energy firms to help it sustain the oil-output recovery – look distant. “Oil companies are still in the wait-and-see mode,” says Geoff Porter, president of North Africa Risk Consulting. “Security costs in Libya are, rightly or wrongly, sky-high. If oil companies can generate revenue more cheaply elsewhere, that’s where they’ll go.”

Libyan pipeline infrastructure. Source: Petroleum Economist



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