assessments

In Libya, Fighting Gives Temporary Boost to Oil Production

5 MINS READSep 26, 2014 | 09:01 GMT
Libyan Oil Production
(MAHMUD TURKIA/AFP/Getty Images)
The Libyan oil tanker 'Anwar Libya' arrives in Tripoli in August.
Summary

Libyan crude oil production has increased dramatically in recent weeks, surging from a low of about 200,000 barrels per day to government claims of over 900,000 barrels per day by Sept. 25, the highest volumes in over a year. This boost in production coincides with some of the highest levels of violence and militia fighting since the 2011 revolution that ousted former leader Moammar Gadhafi. This is because Libya's energy sector is primarily — and paradoxically — benefiting from a shift of focus by the country's armed groups toward other targets, allowing for expanded exports in the short term.

However, Libya's recent successes in oil production are almost certainly temporary. The country's overall trajectory is still headed toward regional infighting, tribal competition and a looming showdown over control of Libya's large hydrocarbon resources, not an improvement in the overall stability or security of the country. While Libyan militias are currently focused on bigger issues than fighting over oil production, entrenched divisions between the various armed groups still do not bode well for the country's ability to sustain high export volumes in the long term.

Libyan crude oil export and production volumes fell precipitously beginning in August 2013, when rogue Petroleum Facilities Guards regional commander Ibrahim Jadhran and his men effectively held four eastern oil terminals hostage, encouraging disgruntled oil workers to occupy a fifth terminal as well. This brought over 500,000 barrels per day of export capacity offline and largely halted oil production in the eastern half of the country. In addition to Jadhran's chokehold over eastern exports, minority ethnic tribal groups, militia competition and a deteriorating security environment brought two of Libya's largest oilfields — Sharara and El Feel — largely offline during the past year as well. 

Oil field shutdowns due to protests and militia occupations began slowly in early 2013 but expanded with the coordinated actions of Jadhran and his government-trained and financed Petroleum Facilities Guards structure. Jadhran allowed eastern exports to resume in July 2013 as part of a larger deal with Libya's new political forces to advance his federalist ambitions within Libya's future constitution.

Militias Shift Focus

With Jadhran helping to safeguard the security of eastern oil terminals, local groups would have to shift their focus to the other various oil fields, pumping stations and pipelines associated with Libya's geographically expansive hydrocarbon industry. Local militias have been the primary security force at various installations since the fall of Gadhafi. Furthermore, these same groups have demonstrated their willingness and ability to peacefully halt oil production and exports at the points of production dozens of times in the past. 

Jadhran's oil strikes also occurred against a backdrop of rising frustration directed at the then-national transitional government, the General National Congress. Libya's various opposition and protest demonstrations initially were able to make demands of a single institution. With the division of national authority into two competing governments, the General National Congress in Tripoli and its internationally recognized successor, the House of Representatives in Tobruk, Libyan fighters have been fighting not for salaries or increased political recognition, but the future of the Libyan revolution. 

Libya's Urban and Rural Power Centers

Libya's Urban and Rural Power Centers

This has led to escalating levels of violence along Libya's more densely populated coastline, especially in the cities of Tripoli and Benghazi, and has diverted much of the attention of smaller militia and tribal groups away from bringing oil production offline. The violent clashes between groups allied with the Misrata-backed, Islamist-leaning Operation Dawn, and the anti-Islamist Operation Dignity lead by retired Gen. Khalifa Hifter, has prompted a shift in competition away from pipelines and pumping stations to extended conflicts over control of strategic airports, highways and sea ports.

Indeed, many of the militia bodies that had become infamous for their frequent protests along oil fields — the Zentan brigades, Misrata-backed forces, and a host of southern and eastern tribal and ethnic groupings — have now found themselves battling over the Tripoli International Airport, sea ports and along Libya's single coastal highway. In the battle for Libya's future, control of this transportation infrastructure, vital for moving fighters and supplies across vast desert expanses, has taken precedence over controlling the flow of oil.

Production Problems Loom

This shift in priorities will prove to be temporary, however, as Libya's sizable oil reserves (the largest in Africa) remain the country's most strategic resource. The current spate of conflicts have organized themselves largely in an Operation Dignity versus Operation Dawn divide, but since the fall of Gadhafi, Libyan power structures and tribal allegiances have proved to be dangerously short-lived. Libya's current levels of oil production are positioned precariously on several unstable prepositions, any of which could signal a downward shift in production on its own.

Jadhran's compliance in Libyan exports is predicated on big-ticket demands of the country's future constitution, namely, local control over oil revenues and strong decentralization of political authority, preferably federalization. Beyond his own competition within the eastern region of Cyrenaica, Libya's dueling governments are currently fighting for control over the central bank, the repository of Libya's energy export revenues. Even if Jadhran and his men are removed from the oil protests equation, future governments will be left with a more fractured, difficult to manage opposition landscape, making it even more difficult to reach deals and resume production. Once one side emerges victorious, there is little incentive for the other to maintain its share of oil revenues to the benefit of a government it does not recognize. 

Ultimately, the success and stability of Libya's oil sector will have to rely on the country's many armed groups recognizing the legitimacy and authority of the central government. In a national political landscape that is as divided as Libya's, such a scenario remains highly unlikely in the medium and long terms, with cracks already emerging in the image of calm and stable oil production broadcasted by the Libyan government.

Last week saw an uneasy calm descend onto Tripoli and Benghazi as outside powers held talks relating to a cease-fire and national dialogue between the two governments. Simultaneously, however, Sharara oil field and the associated Zawiya refinery went offline because of fighting and protests, while eastern oil fields near Giallo were the site of sit-ins by local youths demanding more jobs in the oil sector. Undistracted by coastal-based fighting, Libyan armed groups reverted to halting oil production.

The same stressors that plagued Libya's oil sector are still present, if only temporarily subsumed by a larger national conflict between Operation Dawn and Operation Dignity. Regional competition, tribal feuds and an entrenched fear of a powerful central government will continue to drive Libyans to make themselves and their demands heard. Targeting oil production remains one of the most effective strategies to do so, and one that will likely return in coming months.

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