Libya: concerns for Libya’s oil production in the face of military threats

Libya: concerns for Libya’s oil production in the face of military threats

By Ahmad Hadizat Omayoza, Mamos Nigeria

After Libya’s strongman in the east, General Khalifa Haftar, warned that military action would be taken unless oil revenues are divided fairly within the next two months, concerns have been raised regarding a disastrous oil shutdown in Libya that could have repercussions for global energy markets.

Politicians in the east have threatened to put oil revenues under judicial control, preventing them from reaching the Central Bank from the National Oil Corporation (NOC), the state-run oil company. This is due to the fact that the country has been divided between two governments in the east and west for a long time and there is little chance of presidential elections designed to reunify the country until at least next year.

Even though most of the country’s oil is produced in fields in the east, eastern politicians say that the Central Bank gives most of the money from oil sales to the rival UN-recognized Tripoli government.

Richard Norland, the US special envoy to Libya, had urged the east not to disrupt oil production out of a desire to maintain oil production.

Haftar demanded the creation of a new “higher financial committee” to agree on the allocation of Libya’s oil resources in a speech on Monday night near Benghazi. He stated that “the armed forces will be ready for orders when the time comes” if the body was not established by the end of August, suggesting that he would shut down the oil fields.

Libya produces 1.2m barrels a day, yet has plans to build creation to 2m barrels by 2027. Customers in Europe who are looking for a replacement for the lost Russian crude receive the majority of the oil.

Haftar criticized the Central Bank of Libya’s leadership for allowing widespread corruption in his speech.

He also urged foreign ambassadors, including Norland, to stay out of Libya’s affairs, claiming that their interventions had been a complete failure, served their own interests, and only exacerbated divisions.

Prior to this, Norland had urged the east not to stop producing oil, saying: As a constructive way to address complaints regarding the distribution of oil revenues and to establish transparency without jeopardizing the integrity of Libya’s economy or the non-political nature of the National Oil Corporation, we urge all Libyan leaders to implement a comprehensive mechanism to control revenues.

Farhat bin Qadara, appointed a year ago after his predecessor was ousted, was said to be ready to resign due to political pressure. However, he appears willing to stay on and try to mediate between Haftar and the Tripoli-based government led by Abdul Hamid Dbeibeh, a wealthy businessman.

According to Haftar, the data provided by the central bank showed that “the documentary credits for the year 2022 valued at $10 billion were distributed to 1,646 private companies last year, of which the share of the eastern region was 7%, and the southern region received only 2% of the total of these credits.”

He added that public funds are still being wasted on a daily basis and that official audit reports showed shocking tampering with the capabilities of the Libyan people, with more than 200 billion dinars distributed without benefit to the Libyan people. He claimed that oil revenues were 135 billion dinars and government spending was 122 billion dinars.

He stated, “There is a level of looting of public money that has not occurred in the contemporary history of Libya, with the inability of oversight and the judiciary to do anything to stop the bleeding and theft of public money openly during the day, and in return the Libyans are starving and getting poorer day by day.” This level of looting of public money has not occurred in Libya’s contemporary history.

In the Transparency International corruption perceptions index, Libya is ranked 172 out of 179 countries, and Haftar is an unlikely champion of an anti-corruption campaign.

Norland said prior to Haftar’s speech, ignoring the personal attacks directed at him for his interventions: I am pleased that my recent remarks have sparked such useful discussion among Libyan leaders because one of the underlying conflicts in Libya is the critical issue of how oil revenues are distributed.

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