May 13, 2014 | 09:32 GMT

3 mins read

Libya: Western Oil Production Restarting, but Underlying Challenges Remain


On May 12, Libya's state-owned National Oil Corp. announced that agreements had been reached with various tribal and militia authorities to resume oil production in western Libya, perhaps within the day. International energy markets have responded optimistically; improved relations between Tripoli and local authorities in the country's western region could increase national oil production by some 500,000 barrels per day, up from the current levels of around 150,000 barrels per day.

Renewed production would provide much-needed income for the weak central government in Tripoli, as well as energy relief for the city as summer temperatures begin to rise. However, Libya's political environment is still not conducive to long-term stability, and the broader competition for authority is far from over. Fluctuations in Libyan oil production in the coming months are likely.

For the better part of a year, oil production in Libya has been slowed by a variety of protests involving ethnic groups such as the Tuaregs and Toubou, powerful regional militia councils in cities such as Zentan and pockets of supporters of former Libyan leader Moammar Gadhafi. Protesters have demanded a range of concessions, particularly increased political authority, greater shares of oil revenues and the disbandment of Libya's interim government, the General National Congress. Tripoli has proved capable of temporarily quieting unrest, primarily with cash payments. These tactics have been profitable for Libya's various local and tribal groups, but they have not resolved the underlying sources of tension in the country.
The most prominent ongoing dispute surrounds the Libyan Muslim Brotherhood and its political arm, the Justice and Construction Party. The group is widely viewed as the prime political force behind the contentious May 4 election of Prime Minister Ahmad Mitig, whose win has been contested on legal grounds. The Brotherhood is unlikely to support disbanding the General National Congress without first guaranteeing its political leverage. The movement can rely on support from powerful militia councils in Misrata, the original home of Mitig's family, as well as Islamist-leaning militias such as Benghazi's powerful February 17 Martyrs Brigade.

Nonetheless, as the debate over the legitimacy of Mitig's election continues, it will likely trigger further strikes and production stoppages. Even if the congress were dissolved and a new body elected, the process of forming a new government and drafting a new constitution would renew tribal, ethnic and political tensions, with demonstrations again negatively affecting oil production and exports.

Without a permanent government, stable enforcement mechanisms or a reduction of militia capabilities, agreements in Libya are impermanent. Thus, the new Mitig administration is unlikely to be able to deal effectively with the forces of protest leaders such as Ibrahim Jadhran, whose blockade of Libya's eastern oil terminals have caused the most damage to Libyan export capacity. Jadhran's demands are strongly opposed by the Misratans, Islamists and the Justice and Construction Party. Meanwhile, opposition from the Zentani militia to the federalists and Islamists, along with competition with Misrata, means Zentani forces will likely try to leverage their positions in the Nafusa Mountains through strikes or cut-offs. In the southwest, conflicting Toubou, Arab and Tuareg tribal interests have long kept the large western Sharara oil field from producing reliably.
It is unclear when the next round of tribal or militia tensions will begin, but conditions in Libya do not currently support a lasting political arrangement or normalized energy production. The nominal central government in Tripoli has an incentive to play up even temporary gains to foreign investors, capitals and its own population, but Libya's overall trajectory points toward continued political fragmentation and production volatility.

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