Libyan oil crisis swells as militias refuse to end shutdown

Jan. 8, 2014 at 4:26 PM   |   0 comments

TRIPOLI, Libya, Jan. 8 (UPI) -- Libya's battered oil industry crisis appears to be escalating again, with armed separatist militants who have shut down vital facilities in the east since July now seeking to sell oil from rebel-controlled terminals, while the navy drove off with shellfire a Maltese-flagged tanker that tried to illegally load at one of the blockaded ports.

The militias, who have set up their own "official government of Cyrenaica," named after the Roman province that covered eastern Libya, vowed in a letter sent to major international oil trading companies that they would "fully ensure the security and safety of any ship or tanker that will enter Libyan waters for oil lifting" at the major eastern port of es-Sider.

That pledge rang a little hollow Sunday after the Libyan navy, controlled by the government in Tripoli in western Libya, fired warning shots at the tanker Baku and intercepted as it sought to enter es-Sider at 3.a.m. The vessel turned tail and fled toward Malta.

The government warned it would use force to prevent the separatists selling Libyan oil without authorization from the state-owned National Oil Corp. in Tripoli.

The episode underlined how far apart the two sides stand after a six-month confrontation that has worsened the anarchy that has gripped the country since longtime dictator Moammar Gadhafi was toppled in a 2011 civil war.

Militias refuse to disarm and the shaky government of Prime Minister Ali Zeidan in Tripoli does not have the firepower to rein them in.

The United States and some of its allies are currently training an initial force of 15,000 troops in an effort to bolster Zeidan's authority.

But few observers believe that force will be sufficient to whip the militias into line, raising the prospect of further bloodletting in a country that appears to be running headlong toward another catastrophe that could worsen instability across the region from Tunisia to Egypt.

The eastern rebels have been trying for weeks to encourage oil traders to buy oil from them to raise funds, but with little apparent response.

Sunday's naval interception, and the threat to fire on any vessels trying to sneak into the rebel-held ports, is likely to discourage further attempts.

But the separatists' charismatic leader, Ibrahim Jedran, shows no sign of giving ground on the rebels demand that Tripoli grant autonomy to Cyrenaica and agree to a more equitable sharing of oil revenues than existed during Gadhafi's 43-year rule.

In December, Zeidan said the key export terminals of es-Sider, Ras Lanuf and Zueitina in Cyrenaica, which account for 60 percent of Libyan oil exports, would reopen after negotiations with the separatist rebels charismatic leader, Ibrahim Jedran, who once commanded the 30,000 Petroleum Facilities Guard assigned to guard the very facilities he has shut down.

Jedran reneged on the deal, demanding the government must first recognize Cyrenaica as an autonomous region, something Zeidan can't do without making similar concessions to other regional forces.

The shutdown has slashed oil production from 1.4 million barrels per day to under 200,000 bpd and cut off exports from Libya's main oilfields in the east.

Energy exports account for 95 percent of Libya's state revenue. Official estimate the country had lost around $10 billion because of the shutdown and faces major budget problems.

Eastern Libya holds most of the country's oil reserves of 76.4 billion barrels, the largest in Africa and the fifth largest in the world.

Zeidan has made some progress though. He succeeded in reopening the el Sharara oilfield in western Libya, at the weekend after lengthy negotiations with tribal leaders.

But even if the field returns to its top production capacity of around 300,000 bpd, national output would only be increased to 600,000 bpd, less than half the volume of a year ago.

Adding to Zeidan's woes is the murder of British oil company executive Mark de Salis, a leading figure in the expatriate business community, and his girlfriend, Lynn Howie of New Zealand, on a beach west of Tripoli last week.

The killings follow the December slaying of American chemistry teacher Ronnie Smith in the eastern capital of Benghazi amid a withering campaign of political assassinations.

This will deepen the concerns of foreign oil companies about staying in Libya. Anglo-Dutch Shell and Marathon of the U.S. have left and BP is reportedly pondering a pullout, worsening the Libyan oil industry's woes.

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