Libyan Militia Attacks Oil Terminal

Operation Dignity, a Libyan militia, has attacked the Zueitina oil terminal near Benghazi, local media report. The attack, which took place on Friday, was repelled by Petroleum Facilities Guard forces, which are another militia operating in the country.

The attack, according to reports, was led by Muftah Shagloof, who was appointed by Operation Dignity’s chief General Khalifa Haftar as head of the Petroleum Facilities Guard. Depending on sources, the Operation Dignity move is seen either as an attack on oil facilities or as an attempt to secure their reopening as agreed by the other chief of the PFG, Ibrahim Jahdran, and the Presidential Council.

The agreement followed years of PFG-led blockades of Libya’s four major oil export terminals, which have a combined capacity of 860,000 bpd. The Guard and the UN-backed government of the country reached an agreement in mid-July to reopen the ports, but this deal was met with opposition from none other than the National Oil Corporation, which said the deal was a mistake, rewarding Jahdran for the blockades of the ports.

In a letter to the UN envoy to Libya, Martin Kobler, as well as other officials, including NOC’s chairman Mustafa Sanalla, said that now other militant groups will use the agreement between PFG and the government to start blockading ports as well, as a means of getting money.

Related: Six Weeks In A Row – Rising Rig Count Pushes Oil Down

Operation Dignity was set up in 2014 by General Khalifa Haftar, who proclaimed himself the leader of the Libyan National Army, as an instrument to remove “terrorism and extremism” from Libya.

This latest incident indicates that the likelihood of Libya’s oil output rising by 600,000 bpd, as the NOC said last week, is still far from a certainty. The market then reacted immediately to the news, with crude sliding further down. This week, however, RBC’s head of energy research Helima Croft told CNBC the “danger’ of Libya ramping up its production in any significant way was “a red herring” and the country is more likely to remain a distressed state, in no position to increase its oil production and exports.

By Irina Slav for Oilprice.com

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