Army threatens to derail oil deal struck by unity government

Libya Channel

Libya’s state oil company welcomed on Sunday what it called the “unconditional” reopening of three major oil ports in the east of the country, after the unity government announced a deal with the force guarding the facilities. But Abderrazaq al-Nadhuri, the Chief of Staff of the Libyan Army anchored in the east of the country, reacted to the news by threatening to use force to prevent oil shipment from the ports.

“The air force and navy have started reconnaissance missions and will target any vessel approaching ports without the approval of the Interim Government”, Nadhuri told Libya Channel Sunday night. He said he had instructed the forces accordingly, in his functions as Chief of Staff of the Libyan Army and regional military governor.

Nadhuri’s announcement represents a setback for the Government of National Accord (GNA), which has tried hard to sell the oil port deal to the Libyan public and appeared to have won the approval of the National Oil Corporation (NOC) earlier that day.

Refuting earlier reports, government representatives claimed that the agreement included no financial incentives – a point that NOC Chairman Mustafa Sanallah highlighted in a statement released Sunday.

Sanallah’s statements marked a radical change from last week, when he vehemently rejected the oil port deal, arguing that striking a deal with “malevolent” oil guard commander Ibrahim Jadhran undermined the interests of the NOC and the Libyan people.

Sanallah had sent a letter to UN Special Envoy Martin Kobler on July 22 following the latter’s visit to the Oil Crescent, where the three ports are located, to pave the way for their reopening. In this letter, Sanallah had accused the UN Envoy and the UN-backed GNA of “setting a terrible precedent” by granting recognition to Ibrahim Jadhran, the head of the Petroleum Facilities Guard (PFG) unit guarding the oil ports who has previously held the facilities hostage.

But the GNA nevertheless concluded the deal, announcing it at a press conference in Ras Lanuf on Thursday. It will see the ports of Ras Lanuf, Sidra (also Essider) and Zueitina reopen for crude shipments, marking a major step forward in resolving Libya’s oil production crisis.

Present at the signing were GNA Presidency Council Deputy Prime Minister Musa al-Koni, State Minister Ahmed Hamza and Defense Minister-designate Mahdi al-Barghathi as well as Ali al-Ahrash, head of the Petroleum Facilities Guard, and Ibrahim Jadhran.

Though the details of the agreement were not made public, Deputy PM Al-Koni assured that the port reopening was not a result of blackmail or secret deals. The agreement does, however, include an unspecified amount for outstanding PFG salaries.

“I am pleased the Presidential Council agrees that we cannot reward individuals who hold Libya’s oil hostage,” Sanallah said on Sunday. “There can be no backroom deals if we are to build trust. Any past salary payments to the Petroleum Facilities Guards need to be transparent, properly authorised and documented.”

He said the NOC would begin working with the GNA Presidency Council and the Energy Committee of Libya’s parliament so that exports could restart.

“The NOC will immediately start technical works, and open discussions with our international oil company partners to indemnify the NOC from liability. We need the tribes in the oil producing areas to join our commitment to let Libya’s oil flow freely.”

Sanallah also called on groups preventing oil production elsewhere in Libya to let it resume, including some 470,000 bpd shut in from the Al-Fil (Elephant) and Sharara fields in the south-west. “There are costs for them, too. Shortages of electricity, fuel, food and medicines in their regions are the direct result of their blockades,” he said.

On his part, Ibrahim Jadhran affirmed that the oil ports would open as per the activation of political agreement that would “end divisions”.

Since it assumed functions, the GNA has been making great efforts to pave the way for a resumption of oil exports, Al-Koni said during the Thursday conference. “We promised this and here were are fulfilling this promise”, he declared.

“The clashes in the crescent-oil area that badly damaged the reservoirs and infrastructure are over now. Thanks to our brave sons and general support, oil sector employees are making everything possible to restart oil facilities and fix those that require maintenance”.

The unity government is in contact with OPEC and partner companies and has been working on a security plan to protect oil vessels, Koni added.

Addressing oil sector employees, Koni said that the PC has begun implementing policies to ensure their salaries will be paid.

The NOC said the GNA had released money that would allow it to gradually increase output to 900,000 barrels per day by the end of the year.

Prior to the revolution Libya’s oil production used to hover around 1.6 million bpd. After almost reaching this level in 2012 production slumped due to oil sector protests, security threats, and the political crisis. The extended closure of Ras Lanuf, Sidra and Zueitina has been the main obstacle to ramping up production. Under Jadhran’s leadership PFG forces shut down the ports between 2013 and 2014, demanding political and financial concessions. After the government at the time reached an agreement with Jadhran the terminals resumed shipments, but technical problems and attacks by IS militants brought exports from the Oil Crescent to a renewed standstill last year.

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