Africa French Highlights Oil and Gas

Libya’s Fragile Oil Renaissance Is Under Threat

Libya’s oil production has yet to suffer disruptions, even as oil prices have climbed on fears of potential outages. However, the longer fighting drags on, the more likely Libya’s oil production and export facilities will be impacted, according to global risk consultancy Verisk Maplecroft.

The assault on Tripoli by Khalifa Haftar and the Libyan National Army (LNA) has apparently stalled, at least for now. Haftar had been confident of a swift victory, having the superior military force.

However, various factions have united around the internationally-recognized Government of National Accord (GNA), all with a common enemy in Haftar. The fighting, at this point, has been fought to a stalemate.

Remarkably, there is little evidence that Libya’s oil production or export facilities have been impacted, although they are mostly located away from the capital. Yet, numerous times in the past Libya has seen massive disruptions to its oil flows over seemingly more minor events.

But even as Haftar’s LNA has provided security to oil installations, helping to ensure their continued operation, the longer the fighting drags on in Tripoli, the more likely it is that there will be an outage.

The LNA maintains stability at Libya’s oil fields by essentially sub-contracting and otherwise paying off local militias. Getting bogged down in a stalemate in Tripoli will sap the LNA of resources and stretch supply lines. It will also likely end the payments that the internationally-recognized GNA in Tripoli had been sending the LNA in exchange for security at the oil fields.

All of that means that the LNA will drain itself of funds needed to maintain security. For instance, the outage at the Sharara oil field – Libya’s largest – between December and February came as a result of a salary dispute and grievances over the lack of investment, according to Verisk Maplecroft.

A Tuareg militia group had been responsible for the site’s security disrupted operations.

That highlights the fragility of Libya’s oil renaissance. “The diversion of LNA financial and military resources to the north-west will weaken its ability to maintain the local alliances it relies on to maintain oil site security,” Hamish Kinnear, Senior MENA Analyst at Verisk Maplecroft, wrote in an analysis on April 12.

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