Looking ahead

• Date: 01 May 2020
• Published date: 01 May 2020
• DOI: http://doi.org/10.1111/oet.12774

LOOKING AHEAD

Looking ahead

1|CIVIL WAR HALTS LIBYAN

OIL EXPORTS

There has been a fall of over 1 mn bpd (over 95%) in Lib-

yan oil exports since January, as rebel general Haftar

imposes a blockade in an attempt to force a breakthrough

in the long-running civil war, while overseas backers on

both sides get ever more involved.

Libya's civil war has been in full swing since General

Khalifa Haftar launched his offensive in April 2019

against the Tripoli-based UN-recognised Government of

National Accord, or GNA (led by Fayez al-Sarraj); and

the opposing sides continue to face off against each other

amid worsening conflict. Beginning in mid-January,

Haftar's Libyan National Army (LNA) alongside local

tribes implemented a blockade of oil exports, revenue

from which goes to the central bank in GNA-controlled

Tripoli. Only offshore volumes and gas have escaped his

control, although there were some signs by late April that

the blockade could be easing.

On 18 January, five eastern oil export terminals

which usually handle around 800 000 bpd from the coun-

try's oil-producing Sirte basin were forced to close. Lim-

ited oil storage capacity means production was

immediately affected. A further 370 000 bpd was taken

offline from the western El Sharara and El Feel fields on

19 January, with the forced closure of a pipeline to

coastal export terminals. By March, crude production

was running at just 50 000 bpd, down from 1.15 mn bpd

in December before the blockades began.

Much of Libya's remaining crude output comes from

two offshore fields—theAl-Jurf,operatedbyTotalandEni's

Bouri fields. Gas exports so far are also unaffected, with

March exports to Italy (its only export outlet) at 390 mn f

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/d.

The gas comes from Eni's onshore Wafa field and the off-

shore Bahr Essalam field. Both also produce condensate

which state-National Oil Company (NOC) is still able to

export through the Mellitah complex west of Tripoli.

Losses to NOC from the blockade surpassed $4 bn by

mid-April (NOC sales still generated around $555 mn in

February and $1.21 bn in January). Some sources

suggested that, while the conflict was getting worse, oil

production was likely to come back online soon—partly

dependent on whether Haftar can redirect oil revenues

through a change in personnel at the central bank,

according to reports.

While the LNA nominally controls almost all the coun-

try's oil and gas infrastructure, it lacks direct access to

export revenues which are accrued by NOC in the Tripoli-

based central bank, where it is paid to the 30% of Libyans

across the country who depend on state salaries. The UN

stresses the importa nce of preserving the “integrity and

neutrality of NOC,”which has not taken sides in the war.

Libya relies almost exclusively on oil revenues, and

without them will have to draw on its foreign exchange

reserves, which stood at around $85 bn at end-2019.

The oil blockades are also causing fuel shortages

across the country—the key 120 000 bpd Zawiya refinery

has been offline since early February, which is likely to

limit diesel for power generation. Power stations in the

east which normally run on associated gas produced in

the Sirte basin have also been affected.

2|FOREIGN BUILD UP

The prospects for a peaceful settlement between the east-

ern and western factions have worsened over recent

months as more resources are pumped in from foreign

backers.

The UAE is the LNA's chief backer, carrying out

drone strikes and providing military supplies. Russia is

also an ally and has dispatched mercenaries in support of

Haftar. Other LNA backers include Egypt, Saudi Arabia

and Jordan, which along with UAE are concerned that

Libya may slide into a “form of Muslim Brotherhood-

linked Islamist rule that they see as a threat to their

existence,”according to MEES.

Turkey is the main GNA backer, and stepped up sup-

port in December, including sending a mix of Turkish

troops and Syrian fighters. Qatar, Italy, and Tunisia are

also supporters of the GNA, along with the UN. Turkish

drones have recently taken out two high-level LNA com-

manders and are helping the GNA gain air supremacy in

Tripoli.

Over recent weeks, the LNA also repelled an attack

on the al-Waitya airbase by Tripoli militias and shot

down a Turkish-made done over the western city of

Misrata. But Tripoli-allied forces have shown resilience,

capturing the city of Sabrata, around 75 km west of Trip-

oli, which served as a base for Haftar's forces. They also

took the town of Sorman, 60 km west of the capital.

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