Libya govt says oil exports by rival administration will be stopped

An oil refinery in Libya's northern town of Ras Lanuf on January 11, 2017

Tripoli (AFP) – Libya’s UN-backed government warned Tuesday that any new attempt by a rival administration in the east to export oil independently will be stopped after the region’s military strongman handed it control of key ports.

“Exports by parallel institutions are illegal and will fail as they have failed in the past,” said the head of Libya’s National Oil Corporation (NOC), Mustafa Sanalla.

The self-styled Libyan National Army (LNA) of Field Marshal Khalifa Haftar announced on Monday that all future revenues from the eastern oil ports which it controls will be handed to the unrecognised administration in the east after it recaptured two of them in 10 days of deadly fighting with a rival militia.

The Benghazi-based authorities made a similar attempt to bypass the Tripoli government in April 2016 but their planned sale of 300,000 barrels per day of crude was stopped by the UN Security Council.

“UN Security Council resolutions are very clear — oil facilities, production and exports must remain under the exclusive control of (Tripoli-based) NOC and the sole oversight of the (internationally- recognised) Government of National Accord,” Sanalla said.

“We are confident that the GNA and our international partners will take the necessary steps to stop all exports in breach of international law.”

– Legal action threat –

The NOC warned it would sue any company that tried to buy oil from the eastern authorities and that no purchase contract signed with them would be honoured.

“There is only one legitimate NOC, recognised by the international community and OPEC,” Sanalla said, in reference to a rival NOC set up in the main eastern city of Benghazi.

The eastern administration, for its part, said it was committed to oil revenues being shared equitably and that foreign contracts would be respected.

Haftar took the surprise decision to hand control of the eastern export terminals to the Benghazi-based NOC instead of the internationally recognised state oil firm after his forces suffered heavy losses fighting to recapture two of them.

The Petroleum Facilities Guard of Ibrahim Jadhran, which had controlled the ports from 2011 when a NATO-backed uprising overthrew longtime dictator Moamer Kadhafi until 2016 when it lost them to Haftar’s forces, wrested back control of the Ras Lanuf and Al-Sidra terminals on June 14.

Haftar’s forces lost at least 16 fighters repulsing the offensive which they claimed had been funded by revenues from exports under Tripoli’s auspices.

Before Jadhran’s guards were first expelled by Haftar’s forces in September 2016, they had blocked oil exports for two years due to a dispute with the NOC.

– Fears for united Libya  –

Haftar’s decision on Monday dealt a major blow to international efforts to preserve Libya’s unity through the Tripoli-based GNA.

It also seemed to signal an acknowledgement by Haftar that despite backing from neighbouring Egypt, the United Arab Emirates and Russia, his power is unlikely to extend much beyond his base in the eastern region of Cyrenaica, analysts said.

“Only a few days ago, Haftar was trying to speak like a national figure… today we are witnessing the opposite,” said analyst Jalel Harchaoui.

“Haftar is showing his other face, that of a leader who failed to impose himself as a political or military reality outside of Cyrenaica explicitly saying for the first time he wants to break the centralised oil revenue scheme in Tripoli.”

The NOC chief called on Haftar to reverse his decision for the sake of national unity. 

“The LNA leadership has missed an excellent opportunity to act in the national interest,” Sanalla said.

“Instead of defending the rule of law in Libya by handing the Gulf of Sirte ports over to the operational control of the legitimate and internationally recognised NOC, the LNA has decided to put itself above the law… We hope the country will survive.”

Libya’s economy relies heavily on oil, with production at 1.6 million barrels per day under Kadhafi.

Kadhafi’s 2011 ouster saw production fall to about 20 percent of that level, before recovering to more than one million barrels per day by the end of 2017.

The fighting between Jadhran’s forces and the LNA pushed the NOC to suspend exports from the eastern oil terminals  on June 14, warning of billions of dollars in losses.

After visiting the Ras Lanuf terminal on Sunday, the NOC said the fighting had slashed output by almost half and cost billions of dollars in losses.