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Libya lurches towards energy crisis as armed groups throttle oil supplies

1 Comment| September 5, 2013

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TRIPOLI, Libya, Sept. 4 (UPI) -- Lawless Libya, these days seen as a major haven for al-Qaida, is facing its greatest crisis since Moammar Gadhafi was toppled and killed in October 2011, as armed groups besiege oil fields and terminals, cutting production to a trickle and threatening economic meltdown.

Output has fallen from 1.4 million barrels per day in January to just 250,000 bpd, the government says, as militias, some of them hired by the government to protect energy installations, close down key infrastructure.

Independent analysts believe the production figure is even smaller, some say as low as 60,000 bpd, because of strikes by energy workers, security guards and militias that began in late July over pay and allegations of corruption.

These have been heightened by power struggles, regional demands for greater control of oil revenue, deep-rooted tribal issues that have intensified dangerously since Gadhafi's demise.

"Libya's facing its worst crisis since the fall of Gadhafi in 2011 as a growing malaise in the country's oil industry sets regional and tribal groups against the government and starves the state of essential export revenues," observed analyst Borzou Daragahi in the Financial Times.

"In a country where petroleum export revenues accounted for three-quarters of gross domestic product last year, the implications are enormous."

Underlining the collapse into anarchy, in August, the Libyan navy fired on a Liberian tanker as it approached the es-Sider export terminal, Libya's largest, without authorization amid reports militias were making illegal deals to sell state oil. The tanker fled, without any visible damage or casualties.

The current crisis is all the more troubling since the Libyans had managed to restore production remarkably quickly to the pre-civil war level of 1.6 million bpd which had fallen to zero during the eight-month conflict.

But the growing lawlessness and the government's inability to impose its authority or even control its own nascent armed forces, fueled by regional and tribal rivalries that under the dictatorial Gadhafi had been often brutally contained, have led to anarchy that's throttling one of Africa's largest oil producers.

Libya has posted oil reserves of 76.4 billion barrels, the largest in Africa and the fifth largest in the world.

The strikes and the shutdown of key oilfields, including the es-Sider, Amna and Sirtica fields which jointly produce 600,000 bpd, and the export terminals of Sidra, Ras Lanuf, Brega and Zueitina are bringing the economy to its knees.

In the Nafusa Mountains in the west, protesters have shut down three oil pipelines that normally carry 452,000 bpd a day. Most of that is for domestic use, meaning the country could encounter serious fuel shortages if the closure runs more than a week.

"The government's running on its reserves," declared Sliman Qajam, a member of parliament's energy committee. "If the situation doesn't improve it won't be able to pay salaries by the end of the year."

Another committee member, Fawzia Karawan told the Libya Herald the crisis will "delay development projects of all types" and probably jeopardize future energy contracts with the international oil companies on which Libya depends.

"The state could find itself unable to provide food, medicine, electricity and salaries by 2014," she warned.

Oxford Analytica cautioned that "if maintenance is not completed soon, oil wells could face lasting damage."

In that regard, the crisis is preventing foreign oilmen, needed to keep the industry running and develop badly needed new fields, from returning to work in Europe's largest oil supplier.

Political assassinations, largely in the jihadist stronghold of Benghazi in the eastern Cyrenaica region where most of Libya's oil is located, and attacks on foreign embassies are particularly worrisome.

Regional leaders and Western intelligence services say al-Qaida factions, driven out of their bastion in nearby Mali by French-led forces earlier this year, have moved into Libya's southern desert, a particularly lawless region, armed with weapons plundered from Gadhafi's arsenals.

Prime Minister Ali Zeidan's fragile government, beset on all sides, has been overwhelmed by the scale of the lawlessness and regional turbulence.

Benghazi has long chafed at political control from Tripoli in the west, particularly during four decades of Gadhafi's harsh and quixotic rule.

In August, Zeidan's troubles went up a few notches when a group calling itself the Cyrenaica Regional Council claimed to have usurped the national oil corporation in the east.

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