News / Economy

Libya's Oil Chaos Deepens as Armed Group Shuts Pipeline

A general view of the port and Zawiya Oil Refinery, west of the city of Tripoli, Libya, Aug. 22, 2013.
A general view of the port and Zawiya Oil Refinery, west of the city of Tripoli, Libya, Aug. 22, 2013.
Reuters
Libya's largest western oilfields closed when an armed group shut down the pipeline linking them to ports, its deputy oil minister said on Tuesday, reducing its oil output to a trickle.
 
Total Libyan oil output would be just under 200,000 barrels per day from pre-war levels of around 1.6 million bpd, according to a Reuters estimate, the worst disruption since the civil war in 2011.
 
The fields - El Feel and El Sharara - linked to the pipeline have a combined capacity of around 500,000 barrels per day.
 
“I'm upset. This is something ridiculous. There is nothing to discuss, it's up to the defense ministry and guards to fix this,” Omar Shakmak told Reuters.
 
The group were not protesting oil workers or dissatisfied Petroleum Facilities Guard members, as in eastern Libya, he said, meaning there were no concrete demands up for negotiation.
 
“It's a third party,” Shakmak said, though he did not know who exactly or what they wanted.
 
In the east, striking workers, who had already cut Libyan oil output by over half, want more power for the eastern region, the oil minister said in a television interview earlier on Tuesday. Abdelbari al-Arusi said that output was at 665,000 bpd.
 
He blamed mainly non-oil workers and agitators pushing for federalism in Libya for the strikes, which he said had cost the country $2 billion in lost revenues.
 
Until the protests, improved oil production and higher prices had brought Libya a $3 billion revenue surplus over its target in the first half of this year, Arusi said.
 
Arusi said a prolonged strike could lead to a budget deficit. “If the strikes continue, we will reach very terrifying figures in losses,”  he said.“These groups announced federalism and they don't recognize the government nor the general national council.”

“These youths possess arms now and they have force, and by force they have prevented us from exporting oil and closed the ports,” he added.
 
The strikers had contacted tankers to load oil, Arusi said, adding that international firms keen to maintain long-term ties with Libya and their reputation had rejected those advances.
 
“They brought some tankers outside the state to load them with oil to transfer the financial revenue to their own private accounts,” he added.
 
“They contacted these oil firms, who got in touch with us and [asked] us whether they should deal with them. We told them they are illegal ... and so matters are under control and oil is in safe hands," Arusi said. “These international firms do not want to tarnish their reputation.”
 
Arusi rebuffed strikers' assertion that independent oil sales would prevent corrupt officials within the government from selling crude for personal gain.
 
They accuse the national oil company's senior administration of selling oil without using measurements of quantity.
 
“There are meters at every field and everything is transparent,” the oil minister said, adding Prime Minister Ali Zeidan had set up a commission of inquiry to look into such allegations.

Closed ports
 
The minister said the oil ports of Es Sider, Ras Lanuf, Zueitina and Marsa al Hariga, which are in the east where most of the country's oil production lies, remained closed.
 
Only Marsa al Brega in the east was open.
 
Brega loaded its first crude oil tanker since Aug. 9 over the weekend.
 
“The oil ports are completely closed. Brega was recently opened and Zueitina and Hariga are still closed. Every port has a different reason for their closure,” Arusi added.
 
He warned that a prolonged hiatus in exports would allow other producers, such as fellow OPEC member Saudi Arabia, to step in, depriving Libya of revenue and even possibly forcing it to sell oil at a discount to restore former customers.
 
“This has led to a loss of credibility in the international market ... Saudi Arabia has the ability to up production," he said. "Why do we deprive ourselves of these much-needed financial resources for reconstruction?”

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