Libya reopens its "oil crescent" terminal

Libya reopens its "oil crescent" terminal

Alessandro Scipione
The Government has announced the resumption of crude oil exports from the country's major ports. Their capacity amounts to 600,000 barrels per day

Libya is attempting to return to normality after years of crisis and conflict by reopening its Crescent oil terminal. The country could soon add between one hundred thousand and two hundred thousand barrels of oil per day to its current production, estimated at around 300,000-350,000 barrels. The government of national accord in Tripoli has in fact announced the resumption of crude oil exports from sites controlled by the Petroleum Facilities Guard (PFG), especially from the ports of Sidra and Ras Lanuf.

They are the most important terminals in the country, given their export capacity that amounts to 600,000 barrels of oil per day. Jonathan Winer, the United States’ special envoy for Libya, recently said that, in order to maintain Libya’s economy, at least 800,000 barrels of oil per day would need to be pumped. A goal that appears difficult to achieve in the short term. The PFG do not in fact control the entire supply chain and many wells are managed by tribal militias that are hostile to Ibrahim Jadhran, head of the guard in the oil Crescent, accused by some of having favored the closure of oil fields between 2013 and 2014, causing economic damage that the Chairman of the National Oil Company (NOC), Mustafa Sanallah, estimated to be over $100 billion.

According to Mattia Toaldo, analyst at the European Council on Foreign Relations in London, "the agreement is likely to cause irreparable tensions between the NOC and the government, without the latter currently having solid legal instruments to replace the management of the NOC". The Chairman of the National Oil Company, Mustafa Sanallah, rejected the agreement "because it is wrong to pay Jadhran, who closed the oil terminals". The "eastern" Libyan government of al Bayda, unrecognized by the international community, is said to be deeply opposed to the sale of crude oil without the authorization of the NOC. According to Toaldo, the next reaction of the government entity of Cyrenaica is "unpredictable" and possible "disruptive actions" are not ruled out.

Ibrahim Jadhran, for his part, is taking advantage of the agreement to gain prestige and political legitimacy. "We have turned a page", he said, adding that the resumption of crude oil exports ''takes places pursuant to Libyan political agreements''. His statements were, however, scaled down by the chairman of the PFG, Colonel Ali al-Ahrash, the military that serves as a link between the government of Tripoli and di Jadhran. "We as oil Guards have never signed any political agreement", said al-Ahrash, speaking to the Libyan media. The Defense Minister of the Libyan Government of National Accord, Mahdi al Baraghouti, intervened to quell the controversy: "We have not suffered any provocation nor surrendered to any conditions imposed by Ibrahim Jadhran or by the oil Guards in order to sign this agreement''.

Libya is almost entirely dependent on the production of hydrocarbons. In 2012, according to the estimates of the International Monetary Funds, oil and gas accounted for 96 percent of government revenues and 98 percent of export revenues. In 2011, the year of the start of the civil war, the reduction in extraction activities led to a 62 percent decline in gross domestic product, which in subsequent years experienced a partial recovery, which was called off, however, in 2014. Most of Libya’s crude oil – from 70 to 80 percent – is intended for Europe, especially for Italy, Germany and France. According to data of the Ministry of Economic Development in Rome, in 2010 in Italy, 380,000 barrels of crude oil per day on average were imported from the African country, accounting for 25 percent of national imports. In 2014, they amounted to just 80,000 barrels per day, that is, 8 percent of imports.