Crude politics: Oil exports are, once again, drawn into Libya’s political power struggle

29^th June 2018:

The east Libyan strongman Khalifa Hafter’s unexpected decision to hand authority of the oil terminals under his control to the Eastern-National Oil Company (NOC), away from the UN-backed Western-NOC, has severe ramifications for Libyan oil exports and the wider national crisis. Hafter’s decision now renders oil exports from the eastern oil terminals (Es Sider, Ras Lanuf, Marsa el Brega, Zueitina and Marsa el Hariga) in violation of UN Security Council Resolutions.

Since inception in 2015, the Eastern-NOC has regularly attempted, both openly and via subterfuge, to export Libyan oil independently of the legitimate Western-NOC. However they have consistently failed to secure buyers willing to expose themselves to the associated commercial, legal and reputational risks.

The US, France, UK, Italy, EU and the UN have all condemned Hafter’s move and spoken in support of the Western-NOC. UN Security Council Resolution 2362 provides clear guidance on the subject and “Condemns attempts to illicitly export petroleum, including crude oil and refined petroleum products, from Libya, including by parallel institutions which are not acting under the authority of the Government of National Accord”. Should this guidance be ignored, organisations calling at eastern terminals may face international sanctions and legal action. Furthermore, any such move would effectively enshrine division of the NOC, and to some extent the country, which could place vessels in danger of attack.

It is hoped that Hafter’s move is largely symbolic and that a political resolution can be reached swiftly. In the interim, vessel owners and operators are advised to use extreme caution and vigilance when entering into commercial arrangements in Libya. Legitimate oil exports remain possible from Libya’s remaining terminals under Western-NOC authority; Farwah, Bouri, Mellitah, Zawia, Khoms and Misrata.