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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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Oil Politics Driving Libya Closer To Failure

A rift has opened between Libya’s U.N.-backed government and its powerful National Oil Corporation (NOC), threatening the fractured country’s political cohesion and its nascent petroleum-industry recovery.

On Monday, NOC Chairman Mustafa Sanalla announced that the country has built its oil production up to 760,000 barrels per day and planned to go ahead with plans to expand production to 1.1 million bpd by August of this year.

Just a few days earlier, that same official openly criticized Libya’s Government of National Accord (GNA), a United Nations-backed government whose formation last year raised hopes of political unity in a nation divided by warring militant groups. Sanalla said the GNA aimed to wrest control of NOC’s petroleum deals for power over Libya’s economic future.

Oil profits will be the lifeblood of any successful future government in Libya. Under Gaddafi’s reign, fossil fuels made up over 90 percent of Tripoli’s revenues, which the government used to provide heavy food and consumer goods subsidies to its citizens in exchange for loyalty.

After years of internal struggle, the NOC has managed to develop a firm grip over 90 percent of Libya’s oil export revenues. The company achieves this by claiming to maintain its independence from various factions vying to run the country until elections are held, but Sanalla’s recent statement condemning the GNA breaks from this policy.

The NOC owes its recent stability to the Libyan National Army, which operates under strict orders from Khalifa Haftar. The Gaddafi-era general—a U.S. citizen who lived in the United States for 20 years—has managed to defend the nation’s oilfields and prevent rival groups from interfering with production operations. Related: ‘’OPEC Has Failed’’

Haftar’s maneuvering has ushered in a period of stability in Libya, which has earned him a say in political matters. Russian President Vladimir Putin has taken note of the burgeoning figure, offering him weapons, tours of Russian vessels, and direct access to senior Russian officials..

Sanalla’s attack on the GNA’s credibility and alleged sabotage of the NOC’s work signals a shift in favor away from the pro-Western United Nations and towards Russian interests. Haftar and GNA Prime Minister Fayez al-Sarraj have long been at odds as well.

The latest conflict occurred in February in Cairo, a city considered to be Haftar’s home turf due to Egypt’s backing of LNA military ventures via air strikes. The general’s departure from the Egyptian Capital without meeting with al-Sarraj caused him to lose aerial support from Libya’s eastern neighbor as well as from the United Arab Emirates.

The NOC remains the most powerful domestic factor in the Libyan political arena due to its power over the oil resources necessary for the reconstruction of major cities affected by six years of civil war. Haftar and his LNA is the greatest military strength in the country. Both parties’ distance from the GNA suggests the international community’s plan for the future of Libya inches closer to complete failure each day.

By Zainab Calcuttawala for Oilprice.com

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