Libya oil port shutdown drags on
A swift resolution to the blockade looks unlikely as fighting continues in Tripoli and the UN searches for a new mediator
Economic losses from the eight-week shutdown of Libya’s oil ports have passed $3bn and, with fighting raging in Tripoli and the resignation of the UN’s top mediator, the impasse looks likely to persist.
Five eastern ports and three key south-western oil fields were shut on 17 January on the orders of general Khalifa Haftar’s Libyan National Army (LNA), which is backed by both the eastern government in Tobruk and local tribal leaders.
The shutdown was in response to Ankara deploying Turkish troops and Syrian mercenaries to aid Tripoli’s Government of National Accord (GNA), which is defending the capital from an 11-month offensive by Haftar’s forces.
Crude production reported by Libya’s state-owned National Oil Company (NOC) fell from 1.2mn bl/d to 91,000bl/d by mid-March. NOC chairman Mustafa Sanallah says output will fall further, to 72,000bl/d, comprising 60,000bl/d from the offshore Bouri and Jufra oil fields and 12,000bl/d from the largest gas fields at Wafa.
$83bn – Libya’s foreign reserves
Sanallah has denounced the shutdown as illegal and appealed to Tobruk. Eastern Libya normally produces two thirds of the country’s oil production, and feelings are running high in the region after news that the Syrian mercenaries are being paid by the Tripoli government and therefore, indirectly, from oil revenue. The UN and the US have urged Libya’s central bank to provide full transparency about assets and spending.
The NOC chairman is also unhappy about Tobruk’s imports of aviation fuel from the UAE, one of its backers, breaking NOC’s fuel import monopoly. “The only reason I can think of for additional fuel to be imported in this illegal and clandestine way is that it is intended for other purposes,” says Sanallah.
Aviation fuel is vital to the LNA as it has a near-monopoly in air power, one reason why Haftar controls most of the country apart from the capital and a western coastal strip.
Negotiations on implementing an outline ceasefire agreed at a conference in Berlin in January have ground to a halt following the abrupt resignation of UN Libya envoy Ghassan Salame on 2 March. Salame, who had been in the job since June 2017, cited stress for his decision to leave the post. No permanent replacement has been agreed.
The UN wants an end to the oil blockade to be tied to a ceasefire. But talks have stalled over Haftar’s demand that Turkish and Syrian forces leave Tripoli, and the GNA’s insistence that Haftar not only stop his offensive but also withdraw from the capital’s environs.
One bright spot is that Libya’s foreign reserves provide financial padding for the shutdown. Oil and gas account for 91pc of Libya’s foreign earnings, but the World Bank estimated in October that the country had $83bn in foreign reserves. The central bank has refused to confirm this figure, but, if accurate, then Libya can weather the storm in the short term, with the combined annual spend of the Tripoli and Tobruk governments approximately $24bn.