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Two years after Qadhafi, Libya's oil sector divided

By Stuart Elliott in London

October 29, 2013 - In October 2012, one year after the death of Libya's former dictator Moammar Qadhafi, state oil company NOC said the country's crude production had rebounded to pre-war levels of 1.6 million b/d, and hopes were high that the newly liberated state could boost output yet further.

Fast forward another year though, and the picture could hardly be any more different, with output down to around 600,000 b/d and the industry in a state of chaos.

Libya is divided. The west of the country -- with the major El Sharara and Elephant (El Feel) fields producing almost at capacity -- looks something like the Libya of old.

But in the east, the export terminals of Es Sider, Ras Lanuf, Marsa el-Hariga and Zueitina remain blockaded by security personnel, as they have been since the early summer, with eastern oil production severely impacted as a result.

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The de facto leader of the blockade is Ibrahim al-Jathran, a 33-year-old anti-Qadhafi rebel who fought for control of the eastern oil ports during the 2011 revolution.

After Qadhafi's death, al-Jathran was given command of a government taskforce, the Petroleum Defense Guards, to protect the country's oil infrastructure.

But it was al-Jathran who then in July this year ordered the closure of the eastern oil ports as part of demands that Tripoli allow more political autonomy for the eastern Cyrenaica region.

Something like independence for eastern Libya would pave the way for exports from the region to resume, but outside of the control of NOC.

This would be catastrophic for the current Libyan regime.

But with the country's prime minister Ali Zeidan and its oil minister Adbel Bari el-Arousi both ruling out using force to end the blockades, it's hard to see how Tripoli can halt what looks like an inevitable regional division.

Supporters of greater autonomy for Cyrenaica are refusing to budge on their demands for a federal state and in August made their third call for a federal Libya.

They have now been joined by tribal groups from Fezzan in the south, who also want greater autonomy.

Eastern oil export restart?

Analysts believe the Libyan government is almost powerless to enforce the restart of oil exports in the east of the country as this would likely have to be in exchange for granting greater regional political autonomy.

"The federalist or autonomy demands being made by al-Jathran are unlikely to be met by the central government," Geoff Porter, analyst at North Africa Risk Consulting, told Platts October 25.

"The central government in Tripoli is afraid that any concessions to al-Jathran would put Libya on a slippery slope to disintegration, with other regions also demanding autonomy, decentralization, and greater regional control," Porter said.

Al-Jathran, he said, is insisting on greater autonomy for eastern Libya and greater control of the revenue that eastern Libya's oil facilities generate.

But complicating matters further is that, within the current Libyan regime, there are a number of entities that want a say.

"Although the government of Prime Minister Ali Zeidan formed a crisis committee in September 2013 to deal with the oil production disruption, the committee does not have unfettered authority to resolve the crisis. The oil ministry, NOC and the General National Congress's Energy Committee all also feel as if they should have a say in the resolution of the crisis," Porter said. "So, an ineffective and incoherent group is trying to navigate their way past unrealistic demands."

Porter says that how the crisis ends is the key question. "Seeing that it is very unlikely that Prime Minister Zeidan will resort to force to end the standoff, two other scenarios present themselves. In the first, al-Jathran simply loses momentum and support and eventually abandons his objectives. In the second, the government in Tripoli implements a revenue sharing plan with NOC's subsidiaries throughout the country. Of the two, the second seems the more likely."

Article continues: Libya: Future developments

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