Oil, Libya and tribes

An interesting piece discusses the role of oil in uniting Libya.

It begins, “Oil is Libya’s lifeblood. The country has virtually no other industries or formal employment; oil is its only business. According to theWorld Bank, oil revenues account for over 95 percent of the government’s budget. And since about 80 percent of Libyans are on the government payroll, it is no exaggeration to say that oil feeds and clothes the Libyan people. No other country is so dependent on a single resource. This is especially troubling when you consider that Libya is mostly desert, lacking significant arable land — it can’t grow its own food. “Without hydrocarbons revenue, the viability of the Libyan state is very much in question — which is what we are on the cusp of seeing first hand,” said Geoff Porter, a North Africa risk consultant and assistant professor at West Point”.

In the post Libyan civil war era this reliance has risen, “As the Libyan government split in half, most institutions split as well, with mirror versions being set up in the East and the West. Both governments appointed judges to their respective judicial systems, ran their own central banks, and maintained separate military forces. Perhaps the most important split was that of the National Oil Company (NOC), Libya’s government-owned oil producer and exporter. Given the primacy of oil in Libya’s economy, the NOC is the key to the country. While its headquarters has always been in Tripoli, Tobruk announced the creation of its own eastern NOC in December, declaring that all oil firms must deal solely with it. After all, it argues, the eastern NOC is the one associated with the internationally recognized government”.

Interestingly he writes “At a U.N. Security Council meeting in March, diplomats passed a resolution declaring the most important of Libya’s state agencies — especially the National Oil Company — would remain independent and deal impartially with both rival governments. At the time the resolution was signed, most of the oil and exporting ports were under Tobruk’s control, while all contracts and payments were routed through the national institutions in Tripoli. The resolution committed to maintaining this status quo: Revenue would be split between the two governments, and since neither could function without the other, an uneasy union would be maintained. But in the weeks and months that followed, it became clear that the resolution signed in March had little meaning on the ground. Tobruk forged ahead with its plans to set up its own NOC while Tripoli protested, insisting all oil contracts must continue to route through them”.

Interestingly he notes that “most foreign oil companies — including the largest, such as Britain’s BP, Italy’s Eni, and France’s Total — have chosen to continue dealing with Tripoli over the internationally recognized government in Tobruk. The legal contracts that govern Libya’s oil are expensive and binding, and firms are leery of putting them in Tobruk’s inexperienced hands, said a former employee of the Arabian General Oil Company (AGOCO), a Libyan firm”.

He goes on to mention that “any peace deal will include provisions for appointing singular heads of all government agencies, including the NOC. On paper, this would stitch Libya back together — but Tobruk has already demonstrated its disregard for such agreements. It is still actively seeking to draw clients to its rival NOC. Thus far, it hasn’t succeeded in finalizing any deals (at least publicly) — but this could change if it manages to further consolidate its hold on oil production and export facilities. El-Maghrebi recently said that the eastern NOC is planning to ship a million barrels of crude oil to buyers next week”.

He ends “Ultimately, neither the U.N., nor Tobruk, nor Tripoli will determine Libya’s political and economic fate: the militias and tribes will.“If you want to do anything in Libya, you have to involve the local tribes, the local community,” the former AGOCO employee said”.

 

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