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Anes Alic

Anes Alic

Anes Alic is a veteran investigative journalist and writer whose work in everything from anti-terrorism and high-level politics, to industry, investing and IT has won…

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The War For Ultimate Control Over Libya’s Oil

Libya’s General Haftar is closing in on Tripoli, which in turn is prompting a sudden uptick in Turkish activity on behalf of the Tripoli-based government, and this next phase of war for ultimate control over the country’s oil will be even messier. 

It’s been a stalemate for some time now, with Haftar consistently pushed back and kept from making any significant gains in breaching the Libyan capital. 

But the UN-backed Government of National Accord (GNA) is probably fighting a losing battle because the only foreign friend willing to come to its aid militarily is Turkey, while a lineup of external forces (Egypt, UAE, Russia and in a less tangible way, France) are aiding Haftar, who controls the oil, even if he does not control the oil revenues. 

The forces that do come to the GNA’s support are militias, and that’s where it gets messy. No one outside of Turkey wants to be seen helping these militias, even if they ultimately support the UN-backed government. That support has soured because it’s a tainted business, and everyone is aware that the GNA is entirely beholden to these militias. 

The problem for Haftar is that taking Tripoli will require two steps: First, it will require air strikes on the capital city, and in that respect, Haftar has the advantage because he’s got significant air strike capabilities thanks to external contributions to his war effort. Second, it will require boots on the ground for a final battle, and that means taking on the militias on the streets. This is where Haftar is at a disadvantage. He doesn’t have enough troops who want to do battle on the streets of Tripoli against militia forces. This puts into question Haftar’s ability to take full control of the capital, but if he gains enough control through airstrikes, militias are always for sale to the highest bidder. 

All the indications are there for a new phase in this conflict, and the proof is in these four oil and military developments:  

 #1 GNA’s Failed Oilfield Takeover Attempt

In the last week of November, GNA forces tried to take over the eastern El Feel oilfield - and failed. 

The GNA managed to briefly wrest control of the oilfield from Haftar, who retook it later the same day with airstrikes right outside the compound. Shortly after production resumed at the field, it was shut down again over a valve closure on an export pipeline, taking 73,000 bpd offline and out of the market. With Haftar back in control, the valve closure was not coming from eastern forces and was likely a retaliation from GNA-backed forces.  Related: Iraq’s 550,000 Bpd Oil Deal Is In Jeopardy

Last week, Libya declared force majeure on the field over the valve closure, but a day later, production had been restored. 

Victory - Haftar. 

 #2 Turkey Signs Maritime Boundary Deal with Libya

Turkey signed an agreement last week with the GNA on Mediterranean Sea maritime boundaries, killing two birds with one stone: It strengthens Turkey’s leverage with the GNA and secures it a foothold in Libya (assuming that the GNA continues to hold Tripoli) and it is meant to serve as a bulwark in Libya’s fight with Cyprus over offshore oil and gas exploration. 

This deal is sparking a backlash from Greece and Egypt - all of whom say it is illegal, despite the fact that no one’s actually seen where Libya and Turkey are putting this boundary. Greece expelled the Libyan ambassador to Athens over the incident.

The agreement went into effect last week. 

The point of it all is to send a message about Libya, and about oil and gas exploration in Cyprus, too: No one is doing anything major in this region without going through Turkey first. Turkey needs more leverage, in other words, and it’s using Libya as leverage.  

Turkey is nervous about Haftar’s potential; hence the sudden uptick in Turkish-related activity in Libya.

In the meantime, though, this is a geopolitical oil war that covers the entire region and sucks in Greece, Cyprus, Israel and Egypt - all of whom have oil and gas interests in these waters. 

 #3 Turkish Promise of More Military Support

Turkey has also signed a new defense agreement with the GNA for undefined military and logistical support - an offer that the GNA has accepted as Haftar readies for a new push on Tripoli.

But whether Turkish boots on the ground will be a part of this deal remains unclear; anonymous Turkish officials are saying it’s unlikely. Turkey wants leverage here, not a street battle that could pit it against LNA soldiers and approximately 600-800 Russian mercenaries that the GNA claims are on the ground supporting Haftar in this conflict. 

By late Wednesday, Haftar’s forces were claiming to have cordoned off GNA forces around Tripoli, but there was no confirmation of this on the ground. 

#4 All of a Sudden Oil Deals Are Popping Up

It’s no coincidence that a string of oil deals come at the same time as General Haftar announces a new push on Tripoli. 

Last week, Libya’s NOC approved French Total SA’s acquisition of Marathon Oil’s assets in the country. These assets are worth $450 million and include a minority stake in the Waha concessions, with Total committing to invest an additional $650 million and boost capacity by 180,000 bpd.  Related: US Energy Secretary: The Shale Boom Is Far From Over

While the French largely have pursued a double policy on Libya - paying lip-service to the internationally recognized GNA, but quietly supporting Haftar - the French would prefer to work with the General and are hedging their bets that he’ll come out on top and be good for Libyan oil. 

Also last week, the NOC signed two exploration and production-sharing agreements with Germany’s Wintershall in the Sirte Basin, which also comes along with a $150-million corporate social responsibility commitment on the part of Wintershall. 

Bottom line?

The ‘final’ push is being prepared, and big oil is betting on Haftar. The question at this point isn’t really whether Haftar can take Tripoli - his air strike capabilities could destroy the capital city if he should choose. The question is whether he can take it and then actually control it effectively if he finds himself faced with a ground response once inside from various GNA-supporting militias with possible Turkish military and logistical support. The other question is this: If Haftar fails, will it just be another long-running stalemate inside Tripoli, or will it be a GNA victory that turns into a militia victory over which the GNA has absolutely no control? Either way, Haftar will still control the oil.  

By Anes Alic for Oilprice.com

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