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Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

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What’s Next For Libya As Oil Production Slips

Libya

Libya’s largest oilfield, Sharara, has not pumped new oil for a week as of Sunday, according to news emerging from the area.

World Oil reports that an attack by an armed group caused the field’s pipeline to its nearest export terminal to close. The development sets Libya 330,000-bpd back on its goal of reaching and surpassing pre-Ghaddafi-ousting levels of production. On average, the country pumped 1.6 million barrels of oil per day before the Arab Spring brought the previous dictatorship to its knees.

The El Feel field, another major oilfield, declared a force majeure last week, sources familiar to the case said, while expressing their hesitation due to the private nature of the matter. The same situation unfolded at the Hamada field, according to Arabian Gulf Oil Co. spokesman Omran al-Zwai.

Just last month, Libya’s July output was at a four-year high, perhaps signaling the success of the fledgling regime backed by the might of Khalifa Haftar’s Libyan National Army.

The Islamic State is moving in on Haftar if reports that the terrorist group claimed the attack are to be believed. Ten of the warlord’s soldiers lost their heads at the Fuqahaa Checkpoint in Jufra on Tuesday. Two other civilians died in the same attack.

After the Iraqi army’s declaration of victory against the terrorist group last month, ISIS has made full use of its supporters in the West and in Libya to make its geopolitical point: the effects of its indoctrination on the youths of its former colonies will linger beyond the organization’s structural collapse.

This is a declaration on the international state of affairs for the terrorist group, but the Libyan stronghold of Sirte has been reconquered since last June. Since then, militias native to the country have been warring to take full control of the country’s oil resources. None have proved themselves strong enough or resourceful enough to challenge the LNA so far, ushering in a period of relative peace for the National Oil Corporation that has allowed them to begin recovering lost output.

President Donald Trump recently announced a new plan in Afghanistan that will include a troop surge, but his description included few other specifics. Related: Dear Millennials, Big Oil Is Not Your Enemy

“I share the American people’s frustration,” he said. “I also share their frustration over a foreign policy that has spent too much time, energy, money — and, most importantly, lives — trying to rebuild countries in our own image instead of pursuing our security interests above all other considerations.”

But this apparent decisiveness in Afghanistan doesn’t translate to real policy action in Libya, Iraq, or any of ISIS’ current hotspots. It’s a one-country-at-a-time process for the White House when it comes to calculating its approach to Middle Eastern nations.

In the meantime, Haftar has new allegiances to manage. Either it commits to Moscow’s offer of a lasting alliance in a Russia-backed Libya, or he stays true to his promises to his people that it will remain an independent Tripoli. The region is accustomed to official support from the U.S. or Russia, to ensure a steady stream of weapons to guarantee a stable regime. This was Ghaddafi’s model for controlling his people.

The next stage in Libyan development suggests a strongman leadership approach that offers Haftar near total control of his lands and oil resources. Still, the only way this plan works is with operating oilfields that meet the production goals of oil majors that have already signed contracts with the internationally recognized NOC. Small-scale attacks by the Benghazi Brigades or similarly inclined groups have not affected the country’s output sustainably in the past, and likely won’t in the future. The revival of Libya’s Sharara, El Feel, and Hamada oilfields is the real requirement for a new Libya with a fresh entrance into international oil and financial markets.

By Zainab Calcuttawala for Oilprice.com

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