Andreas Weitzer

Smuggling Libyan fuel has grown into a multi-billion-dollar business.

It was only a few years ago when Malta came to the fore as a seemingly major player in Mediterranean fuel smuggling. For a short while, a Maltese football player, a local fuel trader and a fishmonger from Sicily gained prominence as the alleged conduits of stolen Libyan fuel, handling and trading it in Malta’s ports. They had been arrested in Italy.

Daphne Caruana Galizia had investigated them and we were made to believe that  her investigations into their uncouth dealings were behind her murder, deflecting from the real puppeteers in government. Well, we Maltese were small fry. Smuggling Libyan fuel has grown into a multi-billion-dollar business, involving State actors, mercenaries and organised crime on a large scale. What was once a trade facilitated by fishing boats is now conducted on big, ocean-going vessels.

It is estimated that 20 per cent of all transport fuel consumed in Italy comes from the black market. Four large tanker ships per week leave the port of Benghazi, in Libya full to the brim with smuggled fuel. It costs the recipient countries Italy, Malta, Spain or France billions of euros in forgone taxes and excise duties and finances the ongoing civil war in Libya and Russia’s war in Ukraine.

At the core of this lucrative business is Libya’s absurd fuel subsidy regime.Instead of supporting needy households with direct subsidies, the government in Tripoli continues to sell heavily subsidised fuel, which it mostly has to import. Gasoline, for instance, sells at a discount of 99 per cent to market prices; fuel oils – which comprise heating oil, diesel, maritime fuel and heavy fuel – are on average sold 75 per cent cheaper than their real cost to the budget. Smuggling of fuels to Europe is more profit­able than smuggling narcotics or people while being more difficult to detect: falsified papers, adorned with seals and affidavits, suffice as proof of origin.

According to 2022 figures, the government in Tripoli has spent $13 billion on fuel subsidies, a doubling from the year before. Most of the diesel and gasoline does not originate in Libya. Its small domestic refineries are not producing quantities sufficient enough to support local needs. Hence the vast imports.

Since Putin’s invasion of Ukraine and the ensuing sanctions imposed by Europe and the US, Russia has evolved as Libya’s main energy trading partner, boosting its share of imports from four per cent before the war in Ukraine (2022) to 28 per cent last year. Russia is now Tripoli’s main supplier of fuels. Volumes have increased tenfold since the invasion of Ukraine, to 2.5 million tons of fuel. Most of it is “redirected” to Europe: illicit export is worth $6 billion, according to estimates of Libya’s central bank.

Misdirected by these perverse, wasteful subsidies, gasoline and diesel bypass domestic demand, which cannot be met anymore. Locals have the choice to either queue for hours to get a jerry can of heating oil at official outlets or pay through the nose on the black market. Meanwhile, the smuggling elites make a killing.

They are the sole reason why fuel is subsidised instead of households. This January, the Sharara oil field had to halt production for a few weeks because of a dearth of fuel. The more fuel Libya imports, the less is left for domestic consumption.

At the core of it is the standoff between a weak Tripoli, with its ever-shifting power structures (from still-clinging-to-power, yet dismissed, Prime Minister Abdul Hamid Dbeibeh to anointed, yet-not, but-already, Prime Minister Osama Hammad) and the strongman of Benghazi, Khalifa Haftar, who is supported by the UAE and Russia. To keep the general at bay, his large-scale smuggling ope­rations are condoned. They not only feed him and his entourage but finances Russia’s military presence – what was once known as the Wagner Group, but is run by the Russian Federation now, since warlord Prigozhin’s elimination by an allegedly FSB-orchestrated plane crash.

Russia is now Tripoli’s main supplier of fuels. Volumes have increased tenfold since the invasion of Ukraine, to 2.5 million tons of fuel. Most of it is “redirected” to Europe- What started as a layman’s operation of a Maltese footballer, or Albanian boatsmen, allegedly became a corporate business. Where once fishermen installed an extra tank to fill up with petrol in Libya in exchange for fish, now megatonnage vessels ply the seas, pumping even their water tanks full with distillates.

A Bloomberg report from February 6 describes in great detail a single, failed smuggling operation, ‘The Odyssey of the Queen Majeda’. My opinion piece is in many details based on facts reported there. It is worth reading for better understanding of the intricacies of the trade. On September 8, 2022, the SS Queen Majeda, notorious for transporting Russian fuel from Turkey and ship-to-ship loading of smuggled Libyan fuel at Malta’s Hurd Bank, east of Valletta, was for once arrested by Albanian authori­ties in the Porto Romano harbour of Durres. The ship was meant to deliver $2 million worth of fuel oil to Albania’s Kastrati Group, a local distributor that runs a host of fuel stations in the country.

For Kastrati Group, this was not the first delivery of Libyan fuel by Queen Majeda, a vessel registered in the Marshall Islands and sailing under a Cameroon flag. But it was the first shipment to be arrested, probably on insistence of Italian authorities. The Kastrati Group was quick to notify that the shipment in question was without contract, hence not their responsibility.

The export papers were issued by Brega Petroleum Marketing Co., a purely domestic Libyan distributor not instituted to export goods. It is an affiliate of Libya’s National Oil Company. The documents were all issued on NOC papers and in English, which was unusual and suspicious. While the remaining crew is still under house arrest, with the captain having successfully absconded, the tanker and its cargo have been rotting in the port since. The crew, but neither Kastrati nor Brega, nor the vessel’s owner, is under criminal investigation, probably eternally, Maltese-style.

For me, this proves two things: Exorbitant profits render any sanction harmless. Profit is like water, finding its way through all nooks and crannies. Russia’s profits are unhindered by sanctions. And if we do not get our act together providing serious material help to Ukraine, Putin will win. Everywhere. The security order represented by the UN and the US will be obsolete. Xi Jinping will watch and learn. The war in Ukraine decides our future.


Andreas Weitzer is an independent journalist based in Malta.


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