Oil Won't Save Libya
As political opponents of the Democratic presidential nominee often note, crisis has paralyzed Libya since 2011. To be sure, a power vacuum erupted after dictator Muammar el-Qaddafi’s death, opening the door to a political free-for-all, warring militias, and ISIS. Amidst the ensuing conflict, some hang their hopes on Libya’s greatest natural resource: oil. Ten years ago, over 60 percent of Libya’s GDP came from oil revenues. Today, after years of civil war and falling oil production, this number has been nearly halved. Under effective management, pumping more oil might ensure a successful democratic transition under the fledgling Government of National Accord in Tripoli. Certain realities—ranging from dilapidated oil wellheads to ISIS—undercut the prospects of such oil-fueled progress. Even without these obstacles, betting big on oil could prove disastrous. There is a road to peace in Libya, but it isn’t awash with petroleum.
Libya is precariously split between several factions vying for control. The UN-backed Government of National Accord, also called the unity government, formed in early 2016 and operates from Tripoli. The GNA faces an opposition body based in Tobruk, which collaborates with General Khalifa Hifter and his Libyan National Army (LNA). A third group, located south of Sirte, includes the remnants of the General National Congress (GNC) and several Islamist groups. Other unassociated militias hold territory across the country, including ISIS. Before Qaddafi’s undoing in 2011, Libya produced over 1.6 million barrels of oil per day, which generated most government revenues. Today, the country’s output is less than a quarter of that level—the oil sector is in shambles.
Disorder, Missed Maintenance, and an Unproven Government
Libya is in disarray; the country is simply not ready to revamp the oil industry. The unity government is scrambling for consensus, while competing factions jockey for control of key oil infrastructure. Even if the political actors came to an agreement, the national oil company (NOC) faces technical challenges and the GNA must show it has the influence to effectively manage oil revenues. Increasing oil revenues will prove a daunting task.
First, the new regime in Tripoli is struggling to organize the country. A July merger reuniting the NOC is certainly a positive sign for the oil patch. However, the deal calls for the GNA to share revenues with its Tobruk rival and relocate NOC headquarters to Benghazi. It is unclear whether the GNA will agree to these demands, and General Hifter has yet to signal his approval. Actual progress is uncertain.
More recently, the NOC rejected a separate agreement, one in which the GNA pays the Petroleum Facilities Guard (PFG) to reopen oil export terminals. In 2013, the PFG blockaded several facilities in an alleged attack on corruption in the oil industry. The NOC claims that acquiescing to the PFG sets a treacherous precedent; any armed group could extort payment from the GNA. Without the cooperation of the NOC, which also threatened to revoke its recognition of the GNA, pumping and exporting more oil seems far-fetched.
Second, many upstream facilities and export terminals lie in territory contested between GNA affiliates, various militias, and ISIS, making higher production an even fainter possibility. For the many factions struggling to influence Libya’s next regime, oil infrastructure is a valuable bargaining chip. Rallying the industry requires careful coordination from wellhead to tanker. While fighting lasts, this is highly unlikely.
Third, technical issues beleaguer the oil sector after years of conflict. Constant fighting has damaged oil infrastructure across the country. For example, ISIS fighters riddled storage tanks at Es Sider and Ras Lanuf with machine-gun fire in January, causing them to explode. The resulting fires were visible from space. Other facilities have missed years of much-needed maintenance. Perhaps the newly organized NOC will address these problems, but repairs will take years—especially in insecure areas.