The invisible hands behind the oil blockade in Libya

As Europe plans to phase out Russian fossil fuels after Moscow’s invasion of Ukraine, the lack of cohesive approach between EU member-States on one side; and structural factors still pending on North Africa on the other represent major hurdles undermining the strategy of diversification warmly encouraged by Brussels.

These discrepancies have come in full display in the case of Algeria, an energy powerhouse that has been visibly courted by its European partners looking to increase their gas supplies. As Algiers leverages its renewed centrality to extract economic and political concessions, unresolved issues such as the Maghreb rift could hinder plans to strengthen energy ties between the two shores of the Mediterranean Sea, as well as push competitors such as Italy and Spain on a collision course.

Structural factors also represent a huge impediment in neighbouring Libya, whose higher political volatility is having immediate repercussions on its faltering oil industry. A ‘painful wave of closures’ affecting the major oil terminals and oilfields started on 17 April, when tribesmen and protesters forced the closure of the El Feel oilfield. The National Oil Corporation (NOC) had to declare force majeure at the Brega, Mellitah and Zueitina oil terminals, as well as in other oilfields such as Abu al-Tafil, al-Khaleej, al-Intisar, al-Nakhla, Sarrir and Sharara.

According to some estimates, total oil production, which was hovering around 1,2 billion barrels per day (b/d), dropped by 40%, dealing a huge blow to Libya’s expectations of profiting from the oil price spike that resulted from the conflict in Ukraine.

Closures of oilfields and terminals are not new in Libya, where they are frequently associated with local grievances from disenfranchised communities in remote locations. They can also represent a weapon of last resort, a short of war measure to put additional pressure on rival factions that are part of the decade-long power struggle. The recent closures certainly reflect the resuming political polarisation that resulted from the establishment of the new Government of National Stability (GNS) voted by the House of Representatives in March. Among the demands made by the protesters were indeed the resignations of the rival Prime Minister of the Government of National Unity (GNU) Abdul Hamid Dbeibah and NOC chairman Mustafa Sanalla, as well as a fair and more equitable distribution of oil revenues.

The closures occurred a few days after NOC’s decision to disburse US$8 billion to the Central Bank of Libya in Tripoli, closely aligned with the GNU. The decision was vividly criticised by the GNS Prime Minister-designate Fathi Bashagha, who now enjoys the support of General Khalifa Haftar, after a power-sharing agreement signed following the postponement of the controversial presidential elections in late 2021. Haftar is not new to politically driven oil blockades in Libya, having already been responsible for the closure of oilfields and terminals in 2020.

A closer look then reveals the invisible hands behind the resuming oil blockade in Libya, which, it is worth reminding, occurred in areas under the control of Haftar’s forces. Furthermore, the measure had already been demanded by the Libyan National Army, which, in a dangerous move that could potentially unravel the peace process, suspended its participation in the Joint Military Commission to force Dbeibah to quit. The oil blockade, now partly lifted, also raises uncomfortable questions on the real reasons behind the persisting presence of the Wagner Group in Libya, its airbases and oilfields, despite recent reports suggesting a repositioning of the Russian paramilitary group due to the ongoing fighting in Ukraine.