The Libyan oil industry is in disarray just as the world needs it more than ever

Libya’s oil ministry told CNN on Wednesday that production nearly stopped in June, at 100,000 barrels per day (bpd) from 1.2 million bpd last year. But on Monday, Oil Minister Mohamed Oun told CNN that production had risen to 800,000 barrels a day, saying some fields are back online.

US Ambassador to Libya Richard Norland told CNN on Thursday that because of the country’s political tensions “there are some parties that are trying to take advantage of misrepresenting oil production figures.” The first figures provided by the oil ministry were “inaccurate”, he said, adding that “actual production is significantly higher”.

Here’s what you need to know about Libyan oil:

Why is Libya’s oil important?

The North African nation holds 3% of the world’s proven oil reserves, said Yousef Al Shammari, CEO and head of oil research at CMarkits in London. Although he is a member of the OPEC oil cartel, he is not bound by its production limits due to the political crisis he faces, which means he can extract and export as much oil as he wants.

Its proximity to Europe means it can easily transport oil by sea through much shorter routes than other producers, and most of its oil is exported to European nations, he said.

What is the biggest obstacle to Libya’s oil production?

The warring parties in the country have used oil as leverage as they struggle for power. There is a political stalemate between rival governments in the east and west that has led to armed groups supporting the eastern government taking control of oil plants and closing them multiple times.

The United Nations-backed government of national unity (GNU) is based in the capital, Tripoli, and is headed by interim prime minister Abdulhamid Dbeibeh. To the east is a rival government elected by the parliament led by Fathi Bashaga.

Most of Libya’s oil fields and infrastructure are located in the eastern part of the country, where Commander Khalifa Haftar and his Libyan National Army (LNA) have armed control. He is an ally of the Bashaga government.

Who is in charge of oil production?

On paper, the Tripoli-based National Oil Corporation (NOC) is the entity charged with controlling the production and marketing the country’s oil abroad.

Warring parties in the east and west have been trying to take control of the NOC since 2014, but the sector is overseen by Oil Minister Mohammed Oun, who belongs to the UN-backed Western government.

But his influence is weak, says Libyan analyst Jalel Harchaoui, and he is involved in a power struggle with the CNO, which “did everything” to maximize production.

CNN was unable to reach the NOC for comment.

On the ground, however, Eastern Base Commander Khalifa Haftar is largely in command, Harchaoui says. The armed brigades under his command have stopped production several times.

What is the role of foreign parties?

Oil Minister Oun accused foreign powers of conflicting interests over Libya’s political crisis. “There has to be an agreement between them on the best ways towards a mechanism that removes Libya from this crisis,” he told CNN.

Haftar was supported by Egypt, the United Arab Emirates and Russia.

The Wagner Group, a Russian private military contractor, entered Libya in 2019 in what the United Nations deemed to be an effort to support Haftar and his LNA. It has deployed several hundred Russian personnel to the largest oil fields, experts say.

In 2020, at the height of their involvement, Wagner took control of Libya’s Sharara oil field, one of its largest. The seizure also helped Haftar maintain a halt on oil exports. The presence of Russian personnel gives Moscow the option to cut off Libya’s oil supplies if it so desires, Harchaoui said.

Norland, the US ambassador, said a decline in Libyan production “certainly serves Russian interests and Moscow, no doubt, supports it”, but attributed the current disruptions to “internal Libyan factors”.

Is oil pushing the West to return to Libya?

Earlier this month, the UK embassy showed up in Tripoli and, in March, the US proposed a mechanism to oversee Libya’s oil revenues to resolve the political crisis that is disrupting production.

Approval of the mechanism at the political level still has to follow, but the Libyan parties have agreed in principle “some areas of priority spending,” said Norland, who resides in Tunisia.

Asked whether the US trusts the UN-backed government to restore stable production, Norland said “no political entity exercises sovereign control over all Libyan territory, including oil fields.”

The digested

The White House says Biden’s meeting with Saudi officials will “include” the crown prince

The White House said on Sunday that President Joe Biden’s upcoming meeting with Saudi officials will “include” the kingdom’s crown prince, Mohammed bin Salman, hours after Energy Secretary Jennifer Granholm suggested there would be a meeting one on one.

  • Background: Granholm told CNN on Sunday it was his “understanding” that Biden would meet the Crown Prince face-to-face next month during his planned trip to Saudi Arabia. On Friday, Biden said he will not meet MBS, but that the crown prince would attend an international meeting.
  • Because matter: With the Russian invasion of Ukraine, a global rise in energy prices and a growing nuclear threat from Iran, the United States has sought to rebuild its relations with Saudi Arabia and the Gulf countries. Biden’s upcoming trip to Saudi Arabia complicates the president’s promise to make the country a “pariah” for his role in killing Saudi journalist Jamal Khashoggi.

Iran says ‘too soon’ to talk about Tehran, Riyadh reopens embassies

It would be premature to talk about Iran and Saudi Arabia reopening embassies in their respective capitals, the Iranian Foreign Ministry spokesman said Monday, after five rounds of talks since last year between rivals on improving relations.

  • Background: Riyadh severed ties with Tehran in 2016 after Iranian protesters stormed the Saudi embassy in the Iranian capital following the execution of a Shiite cleric in Saudi Arabia. In April, the two held the fifth round of their negotiations in Iraq, and the first group of 39,635 Iranian Hajj pilgrims authorized to perform their religious duty in Mecca arrived in Saudi Arabia this month.
  • Because matter: Warming ties between the two could significantly ease regional tensions. In a phone call with his UAE counterpart on Saturday, Iranian Foreign Minister Hossein Amir-Abdollahian “stressed the priority of neighbors in Iran’s foreign policy and called for more consultations … to expand bilateral ties.” .

Bahrain will begin accepting the Russian “Mir” payment card.

Bahrain’s ambassador to Russia, Ahmed Al Saati, said his country will soon accept the Russian “Mir” payment card, according to Russian news outlet RT. The ambassador said the move will allow Russian tourists to spend their holidays in Bahrain.

  • Background: Russia created its own card payment system in 2014 because it feared that US and European sanctions against some Russian banks and businessmen for annexing Crimea could block transactions made with US-based Mastercard and Visa . A total of 116 million cards have been issued.
  • Because matter: The recent expulsions of major Russian banks from the SWIFT messaging system mean that customers are finding it difficult to conduct their business outside of Russia. Accepting “Mir” will work to alleviate that blow. The countries that currently accept “Mir” are: Turkey, Vietnam, Armenia, Uzbekistan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, South Ossetia and Abkhazia.

Around the region

A man celebrates the end of the annual Wadi Zalaga camel race by firing a rifle in Sinai, Egypt.A man celebrates the end of the annual Wadi Zalaga camel race by firing a rifle in Sinai, Egypt.

The controversial practice of celebratory gunfire in the Middle East made a comeback after a child in Egypt was killed by a stray bullet from a former politician’s gun.

A court in Egypt late last week banned the use of weapons during the celebrations, according to local news reports. The decision came after a gunshot from a former member of parliament at a wedding in Buhaira Governorate killed a child as he watched the festivities from his balcony. The former politician’s weapons license has since been revoked.

The new ruling gives the authorities the power to refuse, revoke, suspend or reduce weapons licenses as they see fit.

Victims of celebratory gunfire are not uncommon in the Arab world. On New Year’s Eve last year, a Syrian refugee in Lebanon was killed and a plane at Beirut airport was shot in celebration. In September, football leader Mohammed Atwi died of a stray bullet during funeral processions for a victim of the 2020 explosion in Beirut.
Arms celebrations following Jordan’s parliamentary elections in 2020 were met with widespread condemnation, prompting King Abdullah to intervene. They tweeted at the timestating that “the tragic scene that we have witnessed from some individuals after the electoral process, are obvious violations of the law”.

Jordanian TV at Mamlaka estimates that between 2013 and 2018 there were up to 1,869 victims in the country due to celebratory gunshots.

By Muhammad Abdelbary

Photo of the day

A boy prepares to jump off the roof of a structure to cool off in the waters of the Shatt al-Arab stream, formed at the confluence of the Euphrates and Tigris rivers, in the southern Iraqi city of Basra, near sunset on June 18.A boy prepares to jump off the roof of a structure to cool off in the waters of the Shatt al-Arab stream, formed at the confluence of the Euphrates and Tigris rivers, in the southern Iraqi city of Basra, near sunset on June 18.