Tuesday, March 17, 2015

Tanker Seeking Libyan Oil Threatens Further Warfare
Rival regimes fight over who has right to sell neo-colonial state's oil

March 16, 2015 1:41 p.m. ET

An oil tanker booked to load Libyan crude has sparked a fraught question over the North African country’s huge crude reserves: Who has the right to sell the oil when two governments are battling for control of the nation?

The dispute is at the center of the struggle for control of Libya since the imperialist-backed ouster and death of revolutionary Pan-Africanist Moammar Gadhafi and the nation’s descent into violence and instability. The issue has become muddier in recent weeks after a string of terrorist attacks and sabotage crippled the oil industry.

The Vito, a tanker controlled by Aurum Ship Management of the United Arab Emirates, has been chartered to load 1.3 million barrels of crude in Ras Lanuf in eastern Libya, where the country’s internationally recognized government and militias loyal to it hold sway in the city of Tobruk.

The ship was supposed to dock in port on Friday but has remained out of Libyan waters after a rival government that controls the nation’s capital, Tripoli, warned it would use force if the tanker loaded.

Libya’s National Oil Co., controlled by the Tripoli government, has lodged an objection with the U.N., calling the planned loading in Ras Lanuf an illegal oil sale. Tripoli had banned loadings at Ras Lanuf after fighting erupted nearby.

The standoff marks a new chapter in Libya’s internal conflict and shows how the largest crude reserves in Africa are at the heart of a struggle for power. Though the country’s government has been divided, its oil revenues have been distributed to public workers regardless of which side they work for.

Now the Tobruk government has begun to establish a rival to Tripoli’s National Oil, potentially setting up a separate stream of money only for itself.

The Tobruk side denies any connection to the Vito tanker.

“We have not decided if we will sell oil or not,” said Al Mabrook Bou Seif, chairman of the rival company, which is also called National Oil Co.

The crude shipment was to be sent to the U.A.E.’s state oil company, Emirates National Oil Co., said Rahul Warikoo, of Aurum. But he added it was unclear if the vessel, now in Malta, would still go to Ras Lanuf. ENOC couldn’t be reached despite repeated attempts.

The situation comes two weeks after a U.N. report raised questions about who is legally in charge of selling Libyan oil under international law. A U.N. panel of experts on Libyan sanctions said it “has not received a reply from the government of Libya regarding which ports are under its control.”

“It can therefore not establish which oil exports are illicit,” it said.

United Nations-mediated talks to form a unity government are set to restart this week. But the effort has yet to yield results, and the parliament backing the Tobruk cabinet said last week it was pulling out of the dialogue.

Libya can normally pump about 1.5 million barrels of oil a day. But its output has fallen to a third of that level because of fighting. It may take many months to return to normal after terrorists sabotaged oil fields in central Libya.

It also highlights confusion about who is marketing Libyan oil. A document sent to European buyers in December and seen by The Wall Street Journal said the upstart oil company overseen by the Tobruk government in eastern Libya had appointed an official based in Zurich to market its products and had started talks to sell it in Singapore. Mr. Bou Seif, the chairman of that company, denied appointing the Zurich-based official.

Disputes between rival governments can affect oil markets. In Iraq, where Baghdad has tenuous control over a regional government overseeing Kurdistan and its huge reserves of oil, several tankers were unable to unload Kurdish crude last year after the central government obtained legal injunctions or threatened legal action against the buyers.

European Union foreign ministers discussed the Libyan conflict at a meeting Monday in Brussels, amid growing concerns that the fighting between the two governments is creating space for the Islamic State extremist group to build a presence in Libya.

After Monday’s meeting, EU foreign ministers said the bloc “stands ready to enhance its support to Libya” and to help build the country’s capacity to fight terrorism.

The group tasked EU foreign-policy chief Federica Mogherini with presenting options for civilian or military operations in Libya “in support of the security arrangements.”

Ms. Mogherini said Monday evening after the meeting that the ministers saw no alternatives to political dialogue in resolving the conflict in Libya. “What we are preparing for is European Union measures to support the outcome of the political process,” she said.

“We are narrowing the scope of our preparation and so I would expect that at the latest in the next Foreign Affairs Council in April, I will come with concrete proposals.”

In recent days, Ms. Mogherini has set out a range of possible actions the bloc could take to shore up the security situation in Libya if talks aimed at constructing a national unity government are successful. She has said that could include actions to provide security at key infrastructure as well as possible naval activities to help contain threats. The bloc could also send a mission which could monitor a cease-fire, secure the borders and contain the thousands of people seeking to cross from Libya to Europe.

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