Libya’s Ongoing Conflict For Control Of Oil Exports

Libya’s internationally recognized government of Prime Minister Abdullah al-Thinni plans to sell the country’s oil itself and shift proceeds to a friendly foreign bank to keep them out of the hands of a rival group that has declared itself the nation’s true government.

Al-Thinni’s government announced the night of April 4 that the state-owned National Oil Co. (NOC) would begin dealing crude oil and its byproducts directly to existing customers to raise revenue for the country, and that the NOC would now be empowered to attract new customers.

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These revenues would be deposited in a newly opened account at a bank in the United Arab Emirates (UAE) rather than the Central Bank of Libya (CBL), whose assets also have been claimed by the rival government set up by the rival forces of the Islamist group Libya Dawn.

Al-Thinni’s government, based in the eastern city Al-Beida, controls CBL accounts in Libya’s east while the rival government, based in Tripoli, in the west, maintains control of Central Bank accounts in that part of the country.

Control of all these revenues are the goal of both sides, four years after the fall of the country's longtime dictator, Col. Muammar Gadhafi, as they struggle for control of Libya, an OPEC member that holds the largest oil reserves in Africa.

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Despite setting up the new UAE bank account, it’s not clear whether al-Thinni’s government can demonstrate to the world market that it has a legitimate claim to Libya’s oil, at least in part because thousands of contracts, maps and other documents are being kept at the NOC headquarters in Tripoli, which is controlled by the rival government.

Fighting in eastern Libya has been abating somewhat, though fierce attacks persist in the rival west. As a result, Es Sider, the country’s largest oil port, may reopen soon, according to Al-Mabrook Bou Seif, the NOC chairman appointed by al-Thinni’s government.

Bou Seif said his operatives would begin arranging the loading of oil on client ships at Es Sider and other eastern oil ports. “Our management and marketing team are ready to deal with our existing clients and partners,” he told Bloomberg on April 4 in Al-Bayda. “We will start contacting them today.” Bou Seif didn’t name specific companies.

Also likely to reopen is the port of Ras Lanuf, Libya’s third-largest oil port now that Libya Dawn fighters have withdrawn from the eastern coastal region, indicating an end to the effort they began four months ago to capture the two cities. Bou Seif also urged Libya’s oil customers loading their ships in the rival-controlled west to coordinate their efforts with the LOC management appointed by al-Thinni.

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The year-long civil war has damaged and, in some cases, even shut down ports, oil fields and pipelines in Libya.

Es Sider can load 340,000 barrels of crude per day, but needs repairs because rival militias have cut pipelines and cables serving the city, according to Abdulwahed al-Sheikhy, the port’s security chief. He said only 10 of the port’s 19 storage tanks holding 2.14 million barrels of oil are undamaged.

Ras Lanuf, on the other hand, has suffered no such damage. It has a loading capacity of 220,000 barrels per day.

By Andy Tully Of Oilprice.com

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