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Last week, the Turks were still celebrating a presumed victory in Libya after General Haftar lost territory in and around Tripoli and the National Oil Company (NOC) went as far as to restart production at two giant oilfields--Sharara and El Feel. It was an endeavor that lasted a day, with Haftar immediately responding through his control of the Petroleum Facilities Guard (PFG)--the militia forces tasked (and paid by the Libyan state) to guard the country’s oil facilities.
Production at Sharara went online on Sunday, June 7th, while production at El Feel went online the following day. El Feel, which had been heavily damaged over the long shut-down, started with only 12,000 bpd and was supposed to return to full capacity in 14 days. Late on June 8th, the oilfields were stormed and production was stopped again on the 9th, with the NOC again declaring force majeure on Sharara exports. That was a relief to OPEC--struggling with oil production cuts and non-compliance--if not to Libya.
What it means is that Turkey popped the cork on the champagne too soon. The Turks and the GNA may have pushed Haftar out of key areas in his push to take over Tripoli, and retaken control of western Libya, but they will hit a wall trying to go much further.
Having failed to take Tripoli and having faltered in the face of the GNA backed by Turkey, Haftar’s only negotiating power is his control of oil--from production to export terminals. Now that leverage is…
Last week, the Turks were still celebrating a presumed victory in Libya after General Haftar lost territory in and around Tripoli and the National Oil Company (NOC) went as far as to restart production at two giant oilfields--Sharara and El Feel. It was an endeavor that lasted a day, with Haftar immediately responding through his control of the Petroleum Facilities Guard (PFG)--the militia forces tasked (and paid by the Libyan state) to guard the country’s oil facilities.
Production at Sharara went online on Sunday, June 7th, while production at El Feel went online the following day. El Feel, which had been heavily damaged over the long shut-down, started with only 12,000 bpd and was supposed to return to full capacity in 14 days. Late on June 8th, the oilfields were stormed and production was stopped again on the 9th, with the NOC again declaring force majeure on Sharara exports. That was a relief to OPEC--struggling with oil production cuts and non-compliance--if not to Libya.
What it means is that Turkey popped the cork on the champagne too soon. The Turks and the GNA may have pushed Haftar out of key areas in his push to take over Tripoli, and retaken control of western Libya, but they will hit a wall trying to go much further.
Having failed to take Tripoli and having faltered in the face of the GNA backed by Turkey, Haftar’s only negotiating power is his control of oil--from production to export terminals. Now that leverage is even more important, and there will not be any sustained production until there is a diplomatic solution, or until Haftar is replaced as the eastern strongman. Now that Haftar has lost the western part of the country, a military solution is less likely, which is exactly what some Haftar allies--both in the east and among his external supporters--are considering now. Either they 1) abruptly step in to back him militarily to relaunch his offensive, which we believe is not likely at this point; 2) persuade him to negotiate; 3) force a partition; 4) find a new partner in the east.
While many were optimistic that a ceasefire would come about to allow production to return, the GNA is not on board. The ceasefire was Egypt’s idea, and is largely viewed by the GNA (and Turkey) as an attempt to buy time for Haftar and allies to help him regroup. Egypt’s ceasefire and road map plan is supported by Russia and the UAE (both Haftar allies) and calls for the creation of a presidential council (elected), the dismantling of militias and the withdrawal of foreign fighters. The GNA, emboldened, now feels as though it has the upperhand and does not need to bargain from this lowly position. It believes (believed) that Haftar was sufficiently weakened--hence the immediate shut down of production this week.
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