Prof. Miral Sabry AlAshry
After the global economic crisis, Libyans are again realizing the importance of oil. Due to that, Attorney General Al-Siddiq Al-Sour met with the chairman of the National Oil Corporation and the commanders of the West Coast military zone and the 52nd Infantry Brigade to discuss the illegal gains resulting from the smuggling of fuel in the western region.
The plan to pursue smugglers will come from national state forces, not local militias. First, the Attorney General’s Office reports, there will be the implementation of a plan to pursue the perpetrators of crimes affecting the country’s economy. Second, the two military units have been tasked the guarding the Zawiya refinery. It is the role of the military to lock up those involved in fuel smuggling activity.
The Chairman of the National Oil Corporation, Farhat bin Qadara, will focus on the oil industry, and other investment projects through the plan to achieve self-sufficiency in fuel and its derivatives and to realize a set of objectives, including launching the South Refinery project to achieve self-sufficiency in fuel and its derivatives, developing existing refineries, and restoring the Ras Lanuf refinery.
The oil and gas sector is having a positive impact, particularly in the regular payment of wages and the stable electrical grid, which protects fuel supplies by increasing crude oil production to two million barrels a day in the coming years and focusing on increasing gas production and developing human resources, besides its strategy to shift to digital techniques and clean energy.
After the 2011 revolution, the rebound in the oil sector marks a stark contrast in much of Libya, where, since the fall of Moammar Gaddafi, a weak central government has struggled to secure borders and rein in hundreds of well-armed militias.
The internal oil conflict began when the Libyan National Army (LNA), the force controlling the east, announced that it would cooperate with the National Oil Corporation, reducing the risk of already exacerbating institutional divisions in the country.
The oil port crisis erupted in three phases: First, on June 14, 2014, the state’s security vacuum allowed an attack led by Ibrahim Jadran, the former commander of the Petroleum Facilities Guard, in an attempt to regain control of the Oil Crescent within a week. Second, the conflict developed into a larger one over the control of oil and gas revenues.
The commander of the Libyan National Army, Field Marshal Khalifa Haftar, announced that he would not allow the Tripoli-based National Oil Corporation to manage oil sales from the eastern ports. Third, the National Oil Corporation in the east does not have any legal authority, in accordance with UN Security Council resolutions, to control oil. The result was an immediate shutdown of oil sales from eastern Libya. This decision was illegal: there were no buyers for the oil sold, and the country’s exports fell by 50 percent, further starving the economy of hard currency and resulting in oil smuggling.
Hence the division in Libya and the smuggling of oil began, and the informal relationship between the Italian and Maltese mafia and Libyan militia leaders in oil smuggling operations was discovered. The Maltese authorities then failed to curb illegal fuel smuggling, making the island a haven for oil traders from Libya. There is political instability in the region, which international observers have warned is contributing to instability in Libya and costing the country nearly $1 billion (£740 million) a year in lost revenue. Every year, either stolen oil is re-sold as contraband in Libya’s neighbouring countries or Europe, representing an annual revenue loss from state coffers.
In one such instance, it has been reported that between 2014 and 2015, a Swiss company accepted fuel smuggled from Libya inside tanks leased from Enemed to resell the oil at sea and on the European market.
The effect of the smuggling on NOC was devastating, to say the least, with the lost production equaling 333,000 barrels per day (bpd), costing some USD 34.69 million daily. Considering the revenues of oil and gas, which have accounted for 96% to 98% of Tripoli’s income in recent years, in comparison to 2020, GDP dropped 31% after exports of crude oil and condensates fell from 1.1 million barrels in 2019 to 350,000 barrels per day.
Upon that backdrop, Attorney General Al-Siddiq Al-Sour met with the chairman of the National Oil Corporation and the commanders of the West Coast military zone and the 52nd Infantry Brigade.
Things are looking up in Libya’s energy sector this year, at least so far in comparison after production bottomed out at under 600,000 bpd during the first half of 2022—down 50% from the start of the year—and by the end of February 2023, crude oil production was close to pre-blockade levels at 1.164 million bpd. “The State of African Energy Q1 2023 Report” predicts that barring further disruptions, 2023 output should average 1.2 million bpd.
The objective of the NOC is to meet the medium-term goal of 2 million bpd and work to attract additional foreign investment from international oil companies (IOCs) such as France’s TotalEnergies, Italy’s Eni, Britain’s Shell, and America’s ConocoPhillips.
In addition, a new project with NOC is the USD8 billion Structures A&E Offshore Gas Development. To increase confidence, the NOC has created a strategic plan to be carried out by what it is calling the Strategic Programs Office, with a new project under the NOC in the USD8 billion Structures A&E offshore gas development. The idea is to provide more transparency for IOCs into the NOC’s financials and to achieve the ambitious vision of returning Libya to the ranks of the main energy-producing countries in the world.
Prof. Miral Sabry AlAshry is Vice Dean at Future University in Egypt (FUE), and Chairwoman of Alumni in the Middle East at DW Deutsche Welle Akademie.