BRIEFS

LIBYA PURCHASES BLOODLESS RETURN OF ITS EASTERN OIL FACILITIES

In a move that may help restore revenues to a desperate national government in Tripoli, Libya’s ruling General National Council (GNC) has come to a costly agreement with eastern Libyan gunmen that will enable the resumption of oil exports from Libya’s most productive oilfields, facilities blockaded by their former guards since July 2013. Numerous blockades of oil facilities across Libya since the 2011 revolution have cost the nation billions in revenue, effectively denying it the funds it needs to create the kind of security structure that could prevent gunmen from holding the national economy hostage.

According to the April 6 deal between the government and Cyrenaica federalists (Cyrenaica is the former eastern province of Libya) led by former Petroleum Facilities Guard (PFG) commander Ibrahim Jadhran, the eastern rebels are to hand over two occupied terminals this week, with two more following within a month. The status of Libya’s oil terminals and production facilities continues to be fluid, but the current situation at the major installations is as follows:

Jadhran’s official demands included autonomy for Cyrenaica, a greater share of oil revenues and an investigation into corruption in the Libyan oil ministry. While the GNC agreed to the investigation, there were no commitments on the other issues (al-Jazeera, April 11). 

The secret negotiations behind the agreement nearly broke down at one point, with Jadhran having apparent difficulty in persuading his lieutenants to support a deal. Seven members of Jadhran’s Cyrenaican Political Bureau resigned to protest Jadhran’s monopolization of the talks (al-Sharq al-Awsat, April 6). The Bureau is an unelected body that has positioned itself under Jadhran’s leadership as the administration of an autonomous Cyrenaica (or Barqa in Arabic), though the movement has backed off somewhat from earlier talk of outright secession. Jadhran appears to have jeopardized his local popularity with his failed attempt to arrange the covert sale of eastern Libyan oil by means of a North Korean flagged tanker in early March.

According to pan-Arab daily Al-Sharq al-Awsat, the agreement also contained secret clauses calling for the formation of a committee to supervise a referendum on federalism in Cyrenaica, the return of state institutions to the region and a more equitable distribution of national oil revenues. These clauses are supposedly contingent on both parties implementing the present agreement without delay or further amendment (al-Sharq al-Awsat, April 10). Much of the agreement appears to be financial in nature, however, with Tripoli pledging an undisclosed sum of money to cover the “back pay and expenses” of the former Petroleum Facilities Guards who took control of the facilities they were supposed to guard last July (al-Jazeera, April 11). The cash payments and amnesties behind the deal are unlikely to help discourage future occupations and blockades, leaving the national economy in the hands of any of the hundreds of armed groups in Libya ready to seize part of the nation’s poorly protected energy-producing infrastructure.  

In a televised video statement from Tripoli’s Hadba Prison, Sa’adi al-Qaddafi, the recently extradited son of the late Libyan leader, claimed that he had been working through intermediaries with Ibrahim Jadhran to sell Cyrenaican oil on the international market in order to purchase weapons and equipment for Libya’s remaining Qaddafists. Jadhran immediately refuted the damaging allegations on his own TV station while indicating he would sue those involved in broadcasting Sa’adi’s statement (Libya Herald, April 2). No evidence was provided to support Sa’adi’s statement from prison, which comes at a time when a relatively powerless government is interested in discrediting one of its most powerful opponents.

The oil blockades have crippled Libyan efforts at reconstructing the state and re-imposing national security. Oil exports account for nearly all government revenues and their disruption has threatened the government’s ability to meet its payroll as well as various subsidies based on oil revenues. Most importantly, it prevents the GNC from building a national army capable of enforcing its writ. Though there is discussion of Moroccan and/or Turkish involvement in training a new army, the army’s current powerlessness was best displayed when the Zintan militia controlling Tripoli’s airport seized an incoming shipment of weapons destined for the Libyan national army (Los Angeles Times, April 13).

IS RESOLUTION CLOSE IN NORTHERN IRAQ’S PIPELINE WAR?

Baghdad is worried about the political and economic consequences that could follow energy sales conducted independently of the central government, which insists it has the right to control all Iraqi oil sales and the distribution of energy revenues according to the Iraqi constitution. The administration of Kurdish northern Iraq, the Kurdistan Regional Government (KRG), interprets the constitution differently, claiming it has the right to sell oil without the consent of the central government in Baghdad. According to Iraqi deputy prime minister Hussein al-Shahristani, "The most prominent challenge is that we have not reached a national agreement to extract and market oil from all of Iraq’s territory… We have a grey area – we do not know how much oil the [Kurdistan] region is extracting, what price they are selling at and where the revenue goes" (Fars News Agency [Tehran], April 14). With the KRG now pumping oil directly to Turkey through a converted gas pipeline and the central government withholding budget transfers to the north, there is still some optimism that Baghdad and Erbil will come to a mutually profitable agreement to avoid economic and political collapse.

Iraqi prime minister Nuri al-Maliki is determined to assert Baghdad’s control over national oil revenues and is resolutely opposed to Kurdish attempts to make their own deals with foreign consumers like Turkey (al-Sharq al-Awsat, April 8). To enforce the central government’s role, al-Maliki’s government suspended Kurdistan’s annual budget allocation – a loss of billions of dollars to a government that may be pumping oil, but is not yet making any money from it due to Baghdad’s threats to launch legal action against anyone purchasing oil it considers to have been “smuggled” from Iraq.

After signing six energy contracts with Turkey in December, KRG authorities opened the flow of crude oil through a new pipeline to the Turkish port of Ceyhan in late December 2013 (Xinhua, January 2). Shipping 300,000 bpd through the pipeline to start, the oil is being stored for now at the Ceyhan terminal rather than being sold and shipped abroad as Turkey refuses to allow its sale without Baghdad’s approval.

The new pipeline (actually a converted natural gas pipeline) connects the Taq Taq oilfield operated by Anglo-Turkish Genel Energy to the Kirkuk-Ceyhan pipeline at the Fishkabur pumping station near the Kurdish border, thus bypassing the regions affected by sabotage on the Baghdad-controlled Kirkuk-Ceyhan line and enabling the KRG to stop the piecemeal export of oil by tanker truck (Reuters, April 17). The KRG announced plans in October 2013 to build a second pipeline to Turkey within two years that will ship one million bpd to Turkey (Bloomberg, November 8).

Turkey has proposed that revenues from the sale of oil shipped through this proposed pipeline and the existing pipeline that opened in January be handled by a Turkish state bank that will distribute funds according to the formula in the Iraqi constitution that calls for an 83 percent share to Iraq’s central government and a 17 percent share to the KRG (Xinhua, January 2; Rudaw, February 12, 2013). Turkey has emphasized its wish to conduct all such dealings with transparency, but Baghdad still favors full control over oil exports with revenues being deposited to the Development Fund for Iraq account in New York, as is the current practice. Ankara’s role in allowing shipments of Kurdistan-sourced oil to Turkish facilities without the consent of the Baghdad government indicates Turkey’s eagerness to diversify its energy sources (particularly its strategically dangerous overreliance on Russian natural gas) and its intention of pursuing a deepening economic relationship with Iraqi Kurdistan that has both economic and security payoffs.

Baghdad’s suspension of government transfers to Kurdistan to punish its independent oil policy brought an angry response from KRG president Masoud Barzani earlier this month:

In a recent meeting with the head of the Democratic Socialist Group in the EU parliament, President Barzani maintained that the main problem in Iraq was not the oil issue or the failure to pass a national budget, but was rather Baghdad’s insistence on making the Kurds “followers” rather than “partners” (National Iraqi News Agency [Baghdad], April 7). Kurdistan’s economic security adviser, Biwa Khansi, warned that further delays in oil shipments to Turkey would “negatively affect economic relations between Iraq and Turkey” as well as threaten development projects and the ability to form a workable state budget (National Iraqi News Agency [Baghdad], April 12).

Oil flow through the main Kirkuk-Ceyhan pipeline ceased on March 2, when suspected Islamist militants blew up part of the line in the Ayn al-Jahash desert of northwestern Iraq, a region where anti-government Sunni militants are active. Since then, saboteurs have struck the line three more times and have mounted deadly attacks on repair crews sent to fix the damage (Hurriyet [Istanbul], April 1). Military escorts have failed to prevent such attacks and there is little reason to believe Iraqi claims that the pipeline will be back in action within days (Reuters, April 10). Controlled by the Iraqi central government, the Kirkuk to Ceyhan pipeline carries about 20 percent of Iraq’s total oil exports. Nineveh governor Ethel al-Nujaifi admitted that security forces in his governorate were “powerless” to provide the protection necessary to enable repair crews to bring the pipeline to Turkey back online (Zawya [Dubai], April 13). Baghdad is looking to export over one million bpd through the Kirkuk-Ceyhan pipeline by the end of the year and is also looking to build a new 200 kilometer pipeline to Turkey to help expand exports (al-Arabiya, April 9).