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Libya oil deadlock causes jitters in global energy market
by Staff Writers
Tripoli, Libya (UPI) Dec 18, 2013


Libya's deadlocked oil crisis, with rebel warlords refusing to reopen blockaded oil terminals along the Mediterranean coast, is causing jitters on international energy markets as oil exports are reduced to a trickle.

The beleaguered government of Prime Minister Ali Zeidan said last week that the export terminals in the eastern cities of Ras Lanuf, Es Sider and Zueitina, which account for 60 percent of Libya's oil exports, would reopen Sunday.

But rebel chieftain Ibrahim Jedran, who once commanded the 30,000-strong Petroleum Facilities Guard assigned to protect the very facilities he has shut down for months, refused to allow them to resume operations until the Tripoli government recognizes eastern Libya as an autonomous region.

Eastern Libya, known as Cyrenaica, holds most of the North African country's oil reserves of 76.4 billion barrels, the largest in Africa and the fifth largest in the world.

"International oil markets are apprehensive about the negotiations in Libya," the U.S. global security consultancy Stratfor observed.

"Tripoli still faces significant challenges in guaranteeing and protecting its energy industry."

Jedran, it stressed, "has proved to be an intractable adversary with a desire for embarrassing Prime Minister Zeidan and his government in Tripoli," it said.

"His demands for greater regional autonomy and increased profit-sharing ... are popular in the east, but they are anathema to residents of Tripoli and other parts of the country."

"Concessions by Tripoli will not come without a price, even as the legislator tries to negotiate an end to ongoing threats against oil production in western Libya's restive Amazigh and southern tribal regions," Stratfor noted.

Oil production has slumped from around 1.4 million barrels per day following the country's 2011 civil war that toppled longtime dictator Moammar Gadhafi, to around 200,000 bpd, half of which is needed to fuel the 120,000 bpd Zawiya power station.

Analysts estimate that some 600,000 bpd in Libyan crude remains off the market.

Oil Minister Abdelbari al-Arusi said Dec. 7 the country had lost more than $7 billion because of the shutdowns that began July 28, and now faces the problem of other African producers, primarily Algeria and Nigeria, moving into Libya's traditional markets.

Zeidan, who's also plagued in-fighting within his administration and by unrest on other regions, has sought to pressure Jedran through tribal structures to lift the blockade.

He had negotiated with elders of the Magharba tribe of eastern Libya, who announced Dec. 10 they would withdraw their support for Jedran and his militia if the oil blockade continued.

The prime minister had expected that would force Jedran to back down. But he refused to budge. The Magharba are often divided internally, and he may have been able to outmaneuver Zeidan, whose influence is seen to be waning the longer the crisis lasts.

The government is having to handle dozens of restive and heavily armed militias -- including some on the western region known as Tripolitania and the Fezzan in the southern Sahara, another oil production center -- few of which it's able to control.

Zeidan's been reluctant to use his security forces against Jedran and his heavily armed followers because if Tripoli intervenes in what are currently non-violent protests in a bid to restore operations at the export terminals he risks triggering violent reprisals which could damage or destroy infrastructure that would worsen the oil crisis.

"It could also incite a broader domestic conflict between forces opposed to the government," Stratfor said.

Jedran has wide support among eastern tribes, particularly their young men, and he champions their demands for more equitable sharing of oil revenues, which Gadhafi had showered on his allies in other regions.

Jedran last week laid down three conditions for reopening the terminals -- investigations into alleged illegal crude sales by corrupt officials, the creation of an independent committee to monitor crude exports, and more development projects for Cyrenaica.

Tribal leaders said Tripoli agreed to probe the corruption allegations and set up the committee, but refused to accept changes that would legitimize a federal system with autonomous regions.

Jedran has already declared the east an autonomous zone and set up a "national" oil company to run the region's oilfields, terminals and other energy infrastructure.

"Libya's position on the world oil market is slipping," Oxford Analytica noted, stressing "its status as one of the world's leading energy producers is declining."

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