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Dec 13, 2013 | 23:52 GMT

3 mins read

Libya's Latest Oil Standoff

(MAHMUD TURKIA/AFP/Getty Images)
Summary

International oil markets are apprehensive about ongoing negotiations in Libya, where political and security concerns ranging from labor protests to campaigns for federalism brought oil production nearly to a standstill in August. For the past few months, terminals in the eastern cities of Ras Lanuf, Es Sider and Zueitina, which at 600,000 barrels of crude per day account for 60 percent of total exports, have been offline almost continuously, depriving the country of much-needed revenue. Though local tribal leaders and the country's nominal central authority are confident that eastern Libyan oil production will restart Dec. 15, Tripoli still faces significant challenges in guaranteeing and protecting its energy industry.

At the center of the dispute is former rebel commander-turned-regional Petroleum Facilities Guard commander Ibrahim Jadhran, who joined the very protests he was ordered to end in September. Working with other groups, Jadhran has been able to keep eastern Libyan oil export facilities offline, much to the chagrin of the beleaguered central government in Tripoli. On several occasions since August, the government has claimed that oil would be brought back online imminently, but each time Jadhran's protests continued. In fact, his demands have become more ambitious; initially, he demanded more pay for security personnel at oil facilities but he is now calling for an autonomous government in eastern Libya with a greater share of national oil revenues.

After days of negotiations with the central government, elders from Libya's eastern Magharba tribe announced Dec. 10 that they would withdraw their support for Jadhran and his militia if the blockade of oil terminals remained in place. Tripoli has not yet demonstrated a willingness or ability to forcefully end the country's frequent oil strikes and halts in production; so far, their strongest show of force to date was dispatching Jadhran and his Petroleum Facility Guard unit to end the protests he eventually commandeered. But Libya's larger tribal groupings, including the Marghaba, often are divided internally, so it is unclear what they can do to force Jadhran's hand.

Tripoli's incentives for ending the halt in eastern oil production and exports are clear: Libya's legislature, the General National Congress, estimates that some $8 billion in potential revenue has been lost since August, and some parts of the country such as Tripoli and Benghazi suffered from fuel and power shortages this week. Rumors abound that the government permitted the shortages in order to turn the public against the protesters, though citizens are growing increasingly frustrated with the government now as well. Tripoli has said production will resume, with rumors that oil traders have been invited to move tankers into Libyan waters in preparation for loading ships with Libyan crude.

But Jadhran has proved to be an intractable adversary with a desire for embarrassing Prime Minister Ali Zeidan and the government in Tripoli. His demands for greater regional autonomy and increased profit-sharing with Libya's regional governments are popular in the east, but they are anathema to residents of Tripoli and other parts of the country. Concessions by Tripoli will not come without a price, even as the legislature tries to negotiate an end to ongoing threats against oil production in western Libya's restive Amazigh and southern tribal regions. Attempts to remove Jadhran by force also risk clashes that could damage critical export infrastructure and inadvertently extend the country's export hiatus. It could also incite a broader domestic conflict between forces opposed to the government.

Domestic pressures suggest a continued deadlock over the status of eastern Libyan crude exports, but even if Tripoli and Jadhran reach an accommodation, there are several additional tribal, militant and political groups that will try to bring Libyan oil offline in their own dealings with the legislature. Tripoli's greatest risk in its current conflict with Jadhran is that if security forces eliminate peaceful, nonviolent protests and remove blockades at export terminals, they may inadvertently invite violent reprisals, which could further halt production and damage transport and export infrastructure.

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