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Deepening conflict in Libyan oil heartland threatens output

Islamic militias widen their influence, endangering production

Libyan Islamist militias have extended their control over two key central oil ports they seized on 3 March, as the country's civil war escalates and threatens recent oil-output gains. A counter attack or full-blown war in Libya's oil-producing heartland may be imminent.

The militias, led by the Benghazi Defence Brigades (BDB), captured areas surrounding Es-Sider, Libya's largest export terminal, and nearby Ras Lanuf, a refinery and export complex, in a lightening attack on 3 March, advancing against desultory air strikes across 270km of desert.

Their attack has tilted the balance in Libya's civil war, which had been with eastern strongman Khalifa Haftar, whose Libyan National Army (LNA) seized the two ports, along with nearby terminals Brega and Zueitina last September.

The four facilities export oil from the prolific Sirte basin, home to two-thirds of Libyan output.

The National Oil Corporation (NOC), holding company for Libya's state oil assets, said Ras Lanuf and Es-Sider had now shut. Shipping sources said the first cancellation would affect loadings from 7 March, when a tanker was scheduled to lift 0.63m barrels from Es-Sider.

NOC sources said production that had reached 0.7m barrels a day in February had fallen to 0.65m b/d as a result of the disruption. It is likely to drop more steeply.

Waha, a partnership between NOC, ConocoPhillips, Marathon Oil and Hess—and the largest of the Sirte basin's joint ventures—has cut production from 75,000 b/d to 40,000 b/d as a precautionary measure. Germany's Wintershall said it was maintaining production of 35,000 b/d from its C 96 field in central Sirte Basin.

It is unclear whether the militias have entered the ports themselves. One NOC source said local site managers insist the fighters have confined themselves to residential areas outside the perimeters, leaving port facilities untouched.

LNA units fell back over the weekend to Brega, with commanders saying they were massing for an impending counter-attack while daily air strikes have been launched against the militias.

The BDB is so named because its fighters hail from Benghazi. But they fled the city last year after the LNA captured much of it. In recent weeks, they had taken control of Wadda and Houn, from where they launched their assault on the terminals. The attack has also drawn support from Al Qaeda-linked fighters, according to the LNA.

At a press conference in Misrata, Benghazi militias leader Colonel Mustafa Alsharksi said his aim was to return the two ports to the control of the UN-appointed Government of National Accord, the rival administration the Tobruk-based parliament, which is allied with the LNA.

"Our main goal is to reject and say no to oppression, say no to military rule," Alsharksi said, a pointed reference to Haftar's growing authority in eastern Libya.

Alsharksi's choice of Misrata as the location for his press conference was a blunt indication of the prospect of a widening war. Misrata is the largest militia in Libya Dawn, a militia coalition that holds Tripoli and much of western Libya and is at war with the LNA

Appeal for calm

The LNA warned Misrata units on Monday not to drive east to reinforce the Benghazi militias, staging air strikes around the ports and at the towns of Ben Jawad, Harawa and Nawfiliya along the coastal highway west of Es-Sider.

The same day an appeal for calm was issued by the US, France and UK, with a joint statement backing the NOC and the UN accord. "We reaffirm the need to keep oil infrastructure, production, and export under the exclusive control of the NOC acting under the authority of the Government of National Accord (GNA)."

The GNA insisted it had no part in planning the attack. While Libya's civil war is notionally between the government in Tripoli and the parliament in Tobruk, in practice, it is the warlords who call the shots.

Parliament promoted Haftar to Field Marshall for his September oil ports seizure, but he, not the politicians, runs the LNA.

Likewise, the GNA has no forces of its own, with its six-strong presidency mostly confined to a Tripoli naval base while Libya Dawn militias are fighting among themselves, some supporting the GNA, some a third rival administration, the Salvation Government. While the fight for the port was underway on 3 March, pro-Salvation Government units stormed the NOC's Tripoli headquarters, issuing a TV broadcast claiming they now controlled the corporation.

NOC's chairman, Mustafa Sanallah, denounced the continuing militia occupation of his headquarters, saying 6 March: "I strongly condemn cheap tricks like this that try to drag NOC into politics. Above all, NOC and the oil sector should not be a bargaining chip in the political conflict."

Haftar's capture of the oil ports last September saw production jump from less than 300,000 b/d to 0.7m b/d in February, half the 1.4 million b/d figure before civil war broke out in July 2014.

This revival saw NOC issue bullish predictions about future growth. On 24 January, Sanallah predicted production would hit 1.25m b/d by year's end. On 22 February, he signed of an outline production and exploration deal with Russian state oil giant Rosneft in London. He also said output would rise to 2.1m b/d by 2022.

But these plans—like current output levels—are threatened by the escalating civil war. "The five-month period of relative cohesion when it comes to Libya's oil output was, in fact, a bit too good to be true," said financial analyst Jalel Harchaoui, a researcher covering Libya at France's Université de Paris 8. "Since February, a lot of folks on both sides of Libya's fault line were getting agitated. The various factions adopted a more aggressive discourse with regards to the oil."

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