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Libyan Oil May Be Slipping Out Of Putin’s Reach

Zainab Calcuttawala

Last Friday, news broke that the Benghazi Defense Brigades seized control of two major Libyan ports on the “Oil Crescent,” posing a real challenge to Khalifa Haftar and Russia’s grip on the area after weeks of clashes.

According to the unified National Oil Corporation (NOC), the takeover of the Ras Lanuf and Es Sider ports has caused exports to fall by roughly 80,000 barrels per day to a rate of 620,000 bpd. The commercially vital area has now turned into a military zone with Haftar’s Libya National Army on the sidelines.

The BDB clarified this week that it had handed the crucial ports over to the Petroleum Facilities Guard (PFG), which is allied with the United Nations-sanctioned Government of National Accord in Tripoli – an institution Haftar has repeatedly refused to recognize after multiple invitations to join its leadership hierarchy.

The latest refusal came in Cairo, a city considered to be the Ghaddafi-era general’s home turf due to Egypt’s backing of LNA military ventures via air strikes. Haftar’s departure from the Egyptian Capital without meeting with GNA Prime Minister Fayez al-Sarraj last month caused him to lose aerial support from Libya’s eastern neighbor as well as from the United Arab Emirates.

The LNA wrestled control of the Oil Crescent from the PFG in September, providing six months of stability that allowed oil production to rise continuously. Libya’s oil sector recovery captured the sympathy of the Organization of Petroleum Exporting Countries (OPEC) as they set output limits on its members in an effort to reverse the global supply glut. The North African country was exempt, but the NOC’s recent confirmation of an 80,000-bpd production drop due to the recent takeovers translates to another 80,000 barrels of output other OPEC nations may not feel the need to cut.

This could pull the bloc’s compliance to the agreement down, causing oil prices to face volatility for reasons other than the expected disturbances due to the stalemate between de facto OPEC leader Saudi Arabia and American shale oil produces.

With U.S. President Donald J. Trump’s foreign policy plan for the Middle East and North Africa region – and Libya specifically – far from clear, the PFG victory counters Russia’s growing presence in the country.

Haftar—a U.S. citizen who lived in Virginia for 20 years—has travelled to Moscow twice in the past six months for meetings with senior Russian military and defense officials. Leading up to Trump’s oath of office, the general toured a Russian aircraft carrier parked right off of the Benghazi coast, where he video conferenced with Defense Secretary Sergei Shoigu.

The LNA’s success in maintaining economic stability and its closeness to Russia fanned fears held by Europe that Libya is on its way to becoming the next Arab state under Putin’s influence after Syria. But Haftar’s recent defeat sends the signal that Libya’s oil wealth is farther from Moscow’s reach than previously imagined.

Previous NOC projections aimed to grow Libyan oil output to 1.7 million bpd by March 2018. If Haftar’s hold on the oil ports continues to slip, Putin’s vision of recreating a Ghaddafi-style dictatorship in Libya that would purchase arms from Russia will become an unattainable fantasy. The pre-Arab Spring system required firm control of the nation’s energy revenues to subsidize food and fuel costs, in effect purchasing obedience for a lower cost of living. Without the Oil Crescent, Ghaddafi would have been nothing, which is exactly what Haftar will be.

Part of the credit for the BDB’s victorious march comes from the LNA leader’s overconfidence in Cairo. His loss of support from allied Arab air forces—which greatly contributed to the army’s victories throughout its tenure—caused the fighters to be especially vulnerable to the brigade’s attacks this time around. Putin could provide the air support that the LNA now needs, though there is no evidence of any such mobilization as of this article’s writing.

If Haftar loses the Oil Crescent, it will spell the end of a stable, but Russia-friendly chapter of post-Ghaddafi Libyan politics.

By Zainab Calcuttawala for Oilprice.com

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