• 39 mins US Orion To Develop Gas Field In Iraq
  • 3 days U.S. On Track To Unseat Saudi Arabia As No.2 Oil Producer In the World
  • 3 days Senior Interior Dept. Official Says Florida Still On Trump’s Draft Drilling Plan
  • 3 days Schlumberger Optimistic In 2018 For Oilfield Services Businesses
  • 3 days Only 1/3 Of Oil Patch Jobs To Return To Canada After Downturn Ends
  • 3 days Statoil, YPF Finalize Joint Vaca Muerta Development Deal
  • 3 days TransCanada Boasts Long-Term Commitments For Keystone XL
  • 3 days Nigeria Files Suit Against JP Morgan Over Oil Field Sale
  • 3 days Chinese Oil Ships Found Violating UN Sanctions On North Korea
  • 4 days Oil Slick From Iranian Tanker Explosion Is Now The Size Of Paris
  • 4 days Nigeria Approves Petroleum Industry Bill After 17 Long Years
  • 4 days Venezuelan Output Drops To 28-Year Low In 2017
  • 4 days OPEC Revises Up Non-OPEC Production Estimates For 2018
  • 4 days Iraq Ready To Sign Deal With BP For Kirkuk Fields
  • 4 days Kinder Morgan Delays Trans Mountain Launch Again
  • 4 days Shell Inks Another Solar Deal
  • 5 days API Reports Seventh Large Crude Draw In Seven Weeks
  • 5 days Maduro’s Advisors Recommend Selling Petro At Steep 60% Discount
  • 5 days EIA: Shale Oil Output To Rise By 1.8 Million Bpd Through Q1 2019
  • 5 days IEA: Don’t Expect Much Oil From Arctic National Wildlife Refuge Before 2030
  • 5 days Minister Says Norway Must Prepare For Arctic Oil Race With Russia
  • 5 days Eight Years Late—UK Hinkley Point C To Be In Service By 2025
  • 5 days Sunk Iranian Oil Tanker Leave Behind Two Slicks
  • 5 days Saudi Arabia Shuns UBS, BofA As Aramco IPO Coordinators
  • 5 days WCS-WTI Spread Narrows As Exports-By-Rail Pick Up
  • 6 days Norway Grants Record 75 New Offshore Exploration Leases
  • 6 days China’s Growing Appetite For Renewables
  • 6 days Chevron To Resume Drilling In Kurdistan
  • 6 days India Boosts Oil, Gas Resource Estimate Ahead Of Bidding Round
  • 6 days India’s Reliance Boosts Export Refinery Capacity By 30%
  • 6 days Nigeria Among Worst Performers In Electricity Supply
  • 6 days ELN Attacks Another Colombian Pipeline As Ceasefire Ceases
  • 7 days Shell Buys 43.8% Stake In Silicon Ranch Solar
  • 7 days Saudis To Award Nuclear Power Contracts In December
  • 7 days Shell Approves Its First North Sea Oil Project In Six Years
  • 7 days China Unlikely To Maintain Record Oil Product Exports
  • 7 days Australia Solar Power Additions Hit Record In 2017
  • 7 days Morocco Prepares $4.6B Gas Project Tender
  • 7 days Iranian Oil Tanker Sinks After Second Explosion
  • 10 days Russia To Discuss Possible Exit From OPEC Deal

Breaking News:

US Orion To Develop Gas Field In Iraq

Alt Text

4 Factors That Could Derail The OPEC Deal

OPEC and its Russia-led non-OPEC…

Alt Text

The Key To Profiting In 2018’s Energy Market

The rise of renewable sources…

Alt Text

Norway Desperately Needs Large Oil Discoveries

Norway might sustain its current…

Damir Kaletovic

Damir Kaletovic

Damir Kaletovic is a veteran investigative journalist covering Europe and the Middle East, and a senior consultant for Divergente Research.

More Info

Mafia, Guns And Clans: The Big Libyan Oil Heist

Libya Oil

Libya’s oil production problems extend far beyond whether the forces of Tripoli or Benghazi secure ultimate control over the country: Clan-based militias are running their own smuggling operations, and their mafia reach is said to extend as far as the Coast Guard—and even into Europe.

This smuggled oil is making its way into Europe, and Libya authorities say it has cost the state US$360 million so far, at a time when the country is producing only 715,000 barrels per day, down from its Ghaddafi heydays of 1.6 million bpd.

The post-Ghaddafi chaos has created some great business opportunities in both human trafficking and oil smuggling.

According to a stellar and rare (these days) piece of investigative reporting by Italian journalist Frecesca Mannocchi, the western coastal strip of Libya running from Zawya to Sabratha is a smuggler’s paradise, with the local police and coast guard complicit in lucrative oil smuggling activities.

Police told Mannocchi that oil is smuggled by ship from Sabratha to Malta and Sicily, en route to the Italian mainland.

The clans and their militias that control this strip of smuggling are said by locals to be the Hneesh and Dabbashi, who are allies when business is good, but can quickly become enemies in armed conflict.

Where these clans and their smuggling enter the bigger political chaos of Libya is through the Petroleum Facilities Guard (PFG), which was—as its name might suggest—established to protect oil facilities.

Where its gets even bigger is that these clans, locals claim, are working under agreements with the Sicilian Mafia.

In early January, the PFG withdrew from the western Zawiya refinery after the Chairman of Libya’s National Oil Company (NOC), Mustafa Sanalla, accused the group Nasr brigade of using the refinery to run smuggling operations.

That the PFG removed itself from this part of the equation demonstrates the power that General Haftar and the Libyan National Army (LNA) are gaining rather quickly. Controlling Libya means controlling its oil wealth—and controlling its oil wealth means controlling the clan-style mafia from which the PFG is deriving part of its power.

It’s easier said than done—and there are fears that General Haftar, as he reins in the chaos, could turn into another Ghaddafi. There will be a price to pay for ‘stability’.

But we’re not there yet—and we won’t be until Libya can return to its pre-conflict production, which it cannot do until the same people who control the oilfields control the oil revenues. Related: Time Bomb In Oil Markets: Goldman Sachs Issues Warning

This is where it gets tricky. While the LNA is in control of the oilfields right now and has wrested the ports that were being hijacked by the PFG, the oil money goes to the Central Bank of Libya, which is not on the same ‘side’ as the LNA.

Instead, the Central Bank is supported by the failed—or failing—Government of National Accord (GNA) in Tripoli, which has been backed by the UN. As the PFG is a rival to the LNA, so too could be a new group that the GNA is toying with in the form of a Presidential Guard.

The oil won’t flow if the LNA thinks the money is being used to prop up an armed group that will fight against it.

But this situation is extremely dynamic, and this past week alone has seen some major developments. Tripoli is as intense as it gets right now, and the game is to see who can create the most fearful “guards” corps to ostensibly ‘protect’ the country’s assets from corruption.

On Thursday, forces aligned with Khalifa Gwell announced the creation of yet another guard—the Libyan National Guard (LNG), to “protect” institutions. Though they say they are not aligned with any tribe or political party, these are militia from Misrata, and they are already engaging in armed clashes with militias that support the GNA. In effect, they are trying to build a new army. This, in turn, seems to be pushing the GNA towards its rival, General Haftar. Related: Is $55 Oil Really Enough For Qatar?

Indeed, the GNA just announced that it and the Presidential Council—unable to assert control—would make some key changes to include Haftar among their ranks.

This is a game of alliances that shift faster than the news can keep up. As soon as one alliance is solidified, another militia ‘guard’ pops up to force a change. It’s definitely not the right time to try to get into Libyan oil. Nor is there any chance that Libyan oil is going to upset the global balance of supply and demand and scupper the OPEC/non-OPEC deal on production cuts.

It is against this backdrop that oil smuggling thrives, and will continue to thrive, and supermajor oil companies will have no choice but to pull up stakes or play the game, which means indirectly enabling smuggling activities. In these areas, it’s either ‘hire’ the clans for ‘protection’, or suffer the consequences, including kidnapping workers.

By Damir Kaletovic for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News