As Libya wrangles over who is going to control its oil, the Islamic State is closing in, using sporadic attacks designed to rattle nerves and force oil-field evacuations or worker strikes out of fear.
In recent months, ISIS has deployed a large number of fighters at several oil fields, and has been planning attacks on foreign workers as well as oil wells.
In February 2015, one of the ISIS-inspired attacks on the Mabruk field killed nearly 12 people including four foreign nationals.
In early January, ISIS launched an attack on the Es-Sidra and Ras Lanuf oil export terminals in the Libyan coastal province of Sirte, which is now the ISIS stronghold in Libya.
The fear tactics are working. By April 10, 2016, at least three oil fields in eastern Libya were evacuated because of fears of further ISIS attacks. The security sources confirmed the complete evacuation at the Wafa field, while the Tibesti and Bayda fields have been partially evacuated.
On 11 April, workers at the Zelten oilfield went on full strike over fears of a possible ISIS attack. Their fears were raised by the spectre of cars bearing ISIS flags in their districts. They fear an attack is imminent. Related: Will China's Slowing Economy Stall The Silk Road Project?
So far, ISIS—which claims to have established at least three caliphate provinces in Wilayat Fizzan, Barqa and Tarabulus—has not yet taken control of a Libyan oil field. This has led to speculation over whether the group is seeking control or destruction. Destruction, however, is unlikely to be on the books. Militarily, ISIS does not have the capabilities in Libya to launch all-out offensives on these oil fields to gain control. Instead, the group is relying on scare tactics—and there is every indication that it’s working.
The strategy is to isolate the oil fields and disrupt production and supply. In the prevailing chaos in Libya, this is a smart manoeuver that has a number of consequences. It further depletes the country’s oil revenues, and since Gaddafi’s fall, Libya has only been producing one-fifth of its norm. It increases tensions as rival sides make an attempt at a power-sharing deal, which is all about who controls the oil. And it makes the oil field workers jumpy and if they aren’t evacuated, they go on strike.
In a recent interview with the Associated Press, Libyan National Oil Company chief Mustafa Sanalla said the country would become a failed state if the political factions failed to forge a unity government. Sanalla argued that without a single government, there would be "neither security nor stability." Related: Traders Should Not Dismiss Momentum In The Oil Market
Alarmingly, since the collapse of Gaddafi's dictatorship Libya has no functioning national government, national intelligence service, or national army to protect its assets. This political upheaval has created opportunities for further attacks.
Recent attacks on Libyan oil fields have left western companies worried about the prospect of a longer war in the future and its repercussions on their investments. Some of the western oil companies that have presence in Libya include Total, Marathon Oil, and ConocoPhillips. With no functioning national government, there is little protection by the government towards the investments made by the Western companies.
Observers believe that the spread of ISIS and its attacks on Libyan oil fields, the Islamic state is not likely to gain significantly, but its immediate aim is to disrupt the infrastructure so that it can no longer benefit the local governments or groups. ISIS is playing the long game here, and it’s playing against disunited foes.
An analysis of the attacks over the last two years shows that they have disrupted the storage facilities significantly, whilethe same cannot be said about the port infrastructure. Related: OPEC Report Suggests Massive Oil Price Rebound
Reportedly, Libya has lost over US $68 billion in potential oil revenues since 2013. It has seen 75 separate oil field shutdowns and port disruptions.
Recently Libya's National Oil Corporation said it was working with the UN-backed unity government, to coordinate future oil sales. Meanwhile, the UN Security Council has renewed measures to prevent illicit oil exports from Libya.
To arrest this political and economic descent into irredeemably failed statehood, the political factions must act proactively, which at this point largely means throwing their weight behind one of two choices: the UN-backed unity government or the Islamist-leaning government that has been controlling the capital Tripoli. While the rival governments are all angling for control of Libya’s oil, they may lose it all together.
By Charles Kennedy for Oilprice.com
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