Armed groups and society in a western Libyan city
Wolfram Lacher
B. The black market for fuel
The most distinctive aspect of Zawiya’s illicit economy is the city’s function as a key node in the black market for fuel. The structure of this market, and the role of armed groups in it, has changed significantly since 2011; its current form therefore has to be understood as the product of its successive iterations.
From Zawiya’s refinery, both imported and locally produced fuels are distributed across the entire region west of Tripoli, including the Nafusa mountains. Vehicle oil produced in Zawiya supplies the entire Libyan market.
Brega Petroleum Marketing Company, which is fully owned by the NOC, operates fuel depots in Zawiya and other key hubs across Libya. Distribution is managed by four subsidiary companies of Brega—Libya Oil, al-Rahila, al-Sharara, and al-Turuq al-Sari’a. These distribution companies operate stations that should sell fuel at heavily subsidized prices set by the state.
Octane-95, for example, officially costs LYD 0.15 (around USD 0.025–0.03 at 2023 black market currency prices) per liter. The resulting differential with world market prices made fuel smuggling to neighbouring countries a highly lucrative business even during the Qaddafi era. But after 2011, and particularly from 2014 onwards, the scale of fuel smuggling operations increased significantly.
Prior to 2011, the combined amount of petrol and diesel distributed from Zawiya was around 1.2 million liters per week; the weekly amount increased after 2011 and, by 2023, had reached an average of four million liters. Fuel stations multiplied, most of which were ghost stations that existed only on paper or were closed to the public, but sold the fuel they bought at official prices on the black market.
The black market for fuel distributed from the Zawiya refinery developed into a large scale, organized racket during the period of Zawiya’s isolation from Tripoli, from 2015 onwards. During the first half of 2015, fuel distribution from Zawiya towards the Nafusa mountains—from where some fuel was typically smuggled on to Tunisia—was heavily disrupted by road closures, as forces from Warshafana and Zintan clashed with Libya Dawn-aligned Amazigh communities.
At that time, far greater amounts of fuel were distributed to Zuwara, where organized networks with international ties were using tankers to illegally sell fuel to counterparts in Italy, Malta, and beyond— most notoriously to the network led by Fahmi Khalifa. Given the new scale of smuggling from Zuwara, these networks had to operate in collusion with elements in the distribution companies and the refinery—where Kashlaf’s Nasr Battalion had officially acted as the Support Force of the local PFG unit since July 2014, and therefore controlled all fuel trucks leaving the complex.
The need for Zuwaran smugglers to strike arrangements with Kashlaf was even greater given that Kashlaf cooperated closely with coastguard officer Milad, who could intercept tankers on the sea. Similar arrangements straddling the PFG unit, distribution companies, and gas station owners then took root with smugglers in Nalut. Armed groups along the way, not knowing which shipments were legitimate and which ones were destined to be smuggled, began demanding payments from all fuel trucks passing through their checkpoints. This was notably the case in Bir Ayad, a key node for access to the Nafusa mountains and the Tunisian border at Wazin.
In mid-2016, a PFG officer from Zintan began manning a checkpoint at Bir Ayad, where he made fuel trucks pay a toll of LYD 1,000 (around USD 230 at the time) at first, then LYD 6,000 (around USD 720 at the time) per truck by March 2017. Multiple such checkpoints appeared along all roads from Zawiya towards the Tunisian border, including along the coastal road. As a consequence, the fuel was no longer available at official prices, and fuel stations had to close.
According to municipal officials in the Nafusa mountains, any local attempts to clamp down on fuel smuggling triggered a complete suspension of fuel supplies from the Zawiya refinery—with some at the time explicitly blaming Kashlaf for such retaliation. As a result, fuel was no longer only smuggled abroad, but also sold at a black market premium to local consumers. In 2017, this even became the case in Zawiya itself, although the city was home to the refinery.
During 2017 and 2018, the share of the local black market—as opposed to smuggling destined for Tunisia—increased further because Tunisian security forces policed the border more heavily. Moreover, Fahmi Khalifa was arrested in August 2017 and his network dismantled; thereafter, fuel smuggling by sea from Zuwara devolved into multiple smaller-scale operations. From Bridge 27 in Warshafana to the Tunisian border, fuel at official prices was available only in limited quantities—if at all—from mid-2017, requiring buyers to wait long hours in queues.
Instead, it was sold at fluctuating prices along the road by sub-Saharan African migrants, who in turn were working for black market traders closely linked to armed groups. In February 2023, for example, 20 litres sold for around LYD 8 (around USD 1.6) in Zawiya (or LYD 0.4 (USD 0.08) per litre) and LYD 10 (USD 1.9) in Sabratha, though prices had previously been significantly higher at times, and rose again towards the end of 2023.
Fuel was therefore sold in the domestic black market at more than double the official price, and smuggled abroad for much more. With a weekly supply of around four million litres, this meant that the black market for fuel distributed from Zawiya was worth at least LYD 310 million (around USD 60 million at 2023 prices) per year, and likely multiple times that. Arrangements between the armed groups controlling these flows constantly evolved, as did the routes, and attempts to renegotiate arrangements regularly provoked conflict.
From October 2017 onwards, fuel destined for the border area at Regdalein and Zuwara could no longer move along the coast, since Sabratha had been taken over by forces that were de facto loyal to Haftar. Forced to circumvent Sabratha via Bir Ghanem, fuel trucks provided a boon to Trabelsi, whose force manned a checkpoint there. Later, in December 2017, Kashlaf reportedly prevented trucks from leaving the refinery, in an apparent dispute over the distribution of profits. That quarrel was solved by negotiations led by Ali Buzriba the following month.
Meanwhile, Kashlaf tightened his control over the refinery by repeatedly resorting to violence, sending men to beat up managers or vandalize their offices. Another dispute illustrates how armed groups were infiltrating the distribution companies. Throughout 2018, the engine oil produced at the refinery could not be distributed, as competing criminal networks associated with armed groups in and around Zawiya disagreed on how to split the substantial profits to be reaped by selling it on the black market.
A kilogram of engine oil cost LYD 2 (around USD 0.3 at the time) officially, but sold for more than ten times that price on the black market. By November 2018, the amount stored in the refinery had reportedly reached one million kilograms, and production had to be suspended. The armed groups disputing each other’s right to sell the oil had helped set up competing boards of Brega’s Sharara subsidiary: Kashlaf had backed the registration of a Sharara administration in Zawiya; the head of the Fursan Janzur militia, Naji Gneidi, controlled the administration based at the company’s original headquarters in Janzur; Kikli had another Sharara administration registered in Abu Salim; and the Salafist-leaning Criminal Investigations Department in Zawiya’s Mutrid district reportedly backed a fourth administration.
The Tripoli war—which caused the flight of Gneidi, the dismantling of the Mutrid Criminal Investigations Department, and a convergence of interests between Kashlaf and Kikli— then allowed for the dispute to be resolved and production to resume. Over time, then, tight networks formed that straddled armed groups, black market traders, and the management of the distribution companies. Establishing responsibility for black market sales was increasingly difficult, since the distribution companies’ sales to gas stations all had legitimate paperwork; at times, fuel would also change hands several times before ending up in the hands of black market traders.
The attorney general occasionally tried to contain the phenomenon by prosecuting gas station owners who were not selling the fuel they had received to the public. But these efforts had no lasting impact. The Zuwara area saw a resurgence in fuel smuggling by sea; one of the illegal storage facilities hit by GNU drone strikes in May and June 2023 reportedly held two million litres of petrol.
The strikes targeted fuel smuggling locations across western coastal cities, and caused fuel sellers to vanish from the streets overnight as black market traders chose to lay low. After an interval of around a week, gas stations began reopening to sell fuel at the official price, though not yet in quantities sufficient to satisfy demand. By August, however, the quantities of fuel available at the official price began decreasing again in cities west of Zawiya, and black market sales resumed, including in Zawiya itself eventually. The black market for fuel therefore remains a key feature of Zawiya’s militia economy at the time of writing.
***
Wolfram Lacher is a senior associate at the German Institute for International and Security Affairs (SWP) in Berlin. His research focuses on conflict dynamics in Libya and the Sahel, and relies on frequent fieldwork. His work has been published in Survival, Mediterranean Politics, Foreign Affairs, and the Washington Post, among other publications.
____________
