Libya says oil shutdown losses exceed $1.3 billion

Khalifa Haftar's Libyan National Army has stopped oil production in Libya in order to pressure for the redistribution of oil revenues and cripple the embattled government in Tripoli.

TRIPOLI - Libya’s National Oil Corporation (NOC) said in a statement on Tuesday that its crude output had dropped to 183,265 barrels per day as of February 11, adding that total losses due to a shutdown of Libyan oil facilities and ports had reached more than $1.3 billion.

Oil output in Libya has fallen sharply since January 18 because of the oil blockade by tribes loyal to Libyan National Army (LNA) Commander Khalifa Haftar, who backs one of Libya's two rival governments in the House of Representatives, which relocated from the capital Tripoli to the eastern city of Tobruk in late 2014.

Powerful tribes seized large export terminals and choked off major pipelines last month, just days before Germany hosted a high-profile international summit aimed at ending Libya's long-running conflict, as Haftar's eastern-based forces laid siege to Tripoli where the rival UN-backed Government of National Accord (GNA) is based.

Haftar's LNA, which controls the vast oil reserves of southern and eastern Libya, is looking to gain political leverage and cripple the embattled UN-backed government by slashing a main source of its revenue.

The Tripoli government controls only a shrinking corner of the country’s west. But it enjoys a different advantage: its control over Libya’s Central Bank, which holds the country’s oil revenue.

The opaque finances of the bank has drawn sharp criticism. Haftar’s forces accuse the bank of diverting oil assets to pay Syrian mercenaries, employed by Turkey, to defend the capital.

Haftar's supporters accuse the GNA of “selling“ Libya to Turkey, which has upset states throughout the Mediterranean region by using its presence in Libya to violate Greece and Cyprus' maritime boundaries.

Haftar has long accused the Tripoli government of being beholden to an array of extremist militias, comprised of both Libyans and foreign Islamists, that keep it in power. One of his supporters' main demands has been the redistribution of Libya's oil wealth and a fairer allocation of profits to the historically marginalised east.

One main condition of this demand has been the removal of Central Bank Governor Sadiq Al-Kabir. Kabir denies that there is any disparity in Libya's oil spending and says the bank issues regular reports on its finances.

In a statement this week, the cash-strapped central bank reported it had not received any oil revenues for the month of January. With that income gone, it said it would postpone the payment of all salaries of GNA officials.

The Tripoli government’s finance ministry rolled out a series of vague reforms Tuesday toward “regulating” its management systems to “ensure fiscal prudence.” The announcement reflected mounting pressure on the government to hold its public financial institutions accountable.

'Actual power balance'

The NOC on Tuesday reiterated its warning that the blockade is quickly depleting fuel that supplies Libyan power stations. The tribal groups supporting Haftar closed yet another pipeline over the weekend, exacerbating a looming fuel crisis, the statement added.

"The public treasury will bare additional expenditures for importing more quantities of fuel, in order to compensate for the refinery's production," it said.

Although the oil corporation has also called repeatedly for increased transparency, it has warned against an extended blockade by Haftar's forces. 

“We fully acknowledge there is corruption and injustice in Libya“ NOC chairman Mustafa Sanalla said in a speech at Chatham House, ”but acting illegally by blocking Libyan oil production will just lead to the further impoverishment of the Libyan state and erosion of the rule of law.”

The tug-of-war over Libya’s oil revenues has been going on for years. Even so, recent losses are dramatic. The national corporation said current production, which has collapsed to roughly 183,000 barrels a day from about 1.2 million, is at the lowest point since the 2011 uprising that ousted and killed long-time dictator Moammar Gadhafi.

Haftar’s forces have been waging an offensive on Tripoli since April. An influential military commander with an anti-Islamist bent, Haftar has drawn the support of the United Arab Emirates and Egypt - which share in his rejection of political Islamism - as well as France and Russia. Meanwhile Turkey, Italy and Qatar back the GNA in Tripoli.

The international sponsors have pledged to uphold a widely flouted UN arms embargo and push a cease-fire. Regardless, weapons keep pouring into the war-ravaged country in what UN chief Antonio Guterres has bluntly called “a scandal.”

Powerful Western countries like the United States and the United Kingdom - which were members of the NATO coalition that intervened in Libya in 2011 - have come under criticism for failing to take a strong stance.

In a meeting with the Tripoli government’s interior minister late Monday, US ambassador to Libya Richard Norland “reaffirmed US support for ongoing efforts by Libyan authorities to dismantle and disarm militias," which he said pose a “serious threat” to national unity.

The statement's apparent reference to disbanding armed groups defending Tripoli strongly evokes Haftar's previous demands. Despite ostensible American recognition for the UN-backed government, President Donald Trump called to commend Haftar last spring after he launched his assault on the capital.

Oil, the lifeline of Libya’s economy, has long been a key factor in the civil war, as rival authorities jostle for control of oil fields and state revenue. Libya has the ninth largest known oil reserves in the world and the biggest oil reserves in Africa.

The closure of the oil facilities “almost certainly was meant to remind foreign states that Haftar retains control over the country’s oil and gas facilities, which generate almost all the country’s income, even as he enjoys no access to the revenues, which accrue to his Tripoli rivals,” the International Crisis Group, a Brussels-based think tank, said in a report last month.

“His message: the conflict must be resolved in a manner that reflects the actual power balance on the ground, which he views as being squarely in his favor,” the report said.