The status of Libya’s flagship Es Sider grade in recent years sums up the general situation in Libya: A stable recovery after years of conflict is unlikely for now.
In March 2018, we saw crude oil exports from Es Sider over 300,000 barrels per day, the highest since 2013. This crowning achievement, however, did not last long as the volume dropped sharply to 137,000 bpd when armed attacks targeted the eastern ports of Es Sider and Ras Lanuf three months later. Exports had improved by August.
Exports from Es Sider have recovered steadily this year, reaching a five-month high in March. Total Libyan exports were close to 1mn bpd last month, a level mostly attributed to output from ports in the eastern region controlled by the self-styled Libyan National Army (LNA).
The LNA, which supports an administration sitting in eastern Libya, started an operation last week to capture Tripoli, where important institutions such as the National Oil Corporation (NOC) and the Central Bank of Tripoli are located. The capital is also where the internationally-recognized government is based.
Oil revenues, including eastern ports, go to the central bank in the capital. The issue of oil revenues has been among the thorny issues between Libya’s rivals. Last year, when armed attacks hit two vital oil ports in eastern Libya, the LNA accused authorities in Tripoli, including the central bank, of using oil revenues to “fund” armed groups attacking it and oil ports in the east. The central bank denied the allegations, according to local media.
Led by Khalifa Haftar, who was once a supporter of Moammar Gadhafi before switching sides, the LNA has been expanding its influence beyond eastern Libya. In addition to controlling the east, where prolific ports are located, it recently claimed control over Libya’s largest oilfield, El Sharara.
First launching an offensive in southwest Libya in January, the LNA claimed control over El Sharara by February and later the nearby El Feel field. Haftar during the operations in the southwest tried to portray his forces as the “protector” of Libya’s oil wealth. After coming under frequent attacks last year, the LNA’s operation to capture El Sharara was followed quickly by the lifting of force majeure. Now, however, the LNA is seen as a destabilizing element. Haftar, however, never hid his ambitions, saying last year his forces would enter Tripoli “at the right time.” While he carried out his operation in the southwest, he kept his sights on Tripoli.
So far this month, we continue to see Libya’s oil exports rebounding, though much of that is coming from eastern ports. Now the latest offensive is raising valid concerns over the future of exports and production. Although the fighting is taking place in western Libya, it could have implications at the eastern and southwest regions where the vital oilfields and ports that feed the economy are located. If Haftar presses on with his Tripoli operation, his forces may become overextended. If that happens, his positions in the southern region where El Sharara is located and in the east could be exposed to enemy attacks.
The security situation in the eastern region has been relatively stable recently, a situation reflected in oil export strength. But this could change as violence has rarely spared the oil production and exports vital to Libya’s economy.