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Global Energy Advisory May 6th 2016

Politics, Geopolitics & Conflict

• Libya is facing an intensified threat to its oil as east and west continue in a standoff over control of the country’s oil wealth following the east’s thwarted attempt at unilaterally exporting. There is now talk that Libya’s production could fall by 120,000 barrels per day as this battle intensifies. The problem here is that the West has taken the stance that the Unity government (the Government of National Accord, GNA) is the only way out of the Libyan chaos. It hasn’t been approached very adeptly, however. The GNA showed up in Tripoli and got help from armed factions that the internationally recognized government (until recently) finds a bit intimidating. The eastern government in Benghazi is now concerned that it will be sidelined—and rightly so; hence the attempt to export oil unilaterally and gain some leverage. And it is not impossible for them to gain this leverage. While it’s the Tripoli-based National Oil Company that has run things since Gaddafi’s fall in 2011, if the newly established Benghazi National Oil Company manages to makes its own oil money, it will indicate that it can survive on its own, and this would be a break-up of the country and a full-fledged civil war, which ISIS would absolutely love. The eastern government will not sign off on the GNA at this point—at least not until they are sure they can’t gain enough leverage to get back into the game.

•…

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