Libya’s oil production has now ‘virtually stopped’ as the country struggles to recover from western intervention that saw Muammar Gaddafi’s downfall, Mamdouh G. Salameh, oil consultant to the World Bank, tells RT.
Libya descended into chaos after the death of Gaddafi two years
ago, and the country remains in political turmoil. The country’s
administrative and security structures remain incredibly fragile.
Only last month, the country’s Prime Minister Ali Zeidan was
kidnapped from his own residence by militia.
The US consulate in Benghazi fell under siege in September. Four
diplomats and the US ambassador were killed in the assault. The
Russian mission in the country also fell under direct attack at
the beginning of October in Tripoli. One person was killed and
four others were injured.
The presence of militia remains more visible than the state
security forces in the capital, while vast portions of the
oil-producing desert country remain completely out of the central
government’s control.
Libya holds the largest proven oil reserves in Africa, and its
revenues used to almost entirely finance education, healthcare
and maintenance in the country – any disruption to its production
would be a disaster. The country’s oil production has already
dropped from some 1.5 million barrels per day during the Gaddafi
era to – at a low point – a mere 150,000 barrels per day,
according to National Oil Corporation statistics released in
September.
Over the weekend, a separatist Libyan region announced the
establishment of an independent oil company after taking over
several commercial sea ports. Protesters shut off the country’s
only natural gas export line to Italy on Monday. The port in
question is operated by Libya’s National Oil Corp and the Italian
energy company Eni. The protesters have been given ten days to
clear the facilities.
Gas flows on the pipeline to Italy were at 15.9 million cubic
meters on Monday, Reuters reported. Italy is the lone buyer of
gas exports from the Arab country. Libya's rank as a producer and
reserve holder is less significant for natural gas than it is for
oil, but it still has 1,549 billion cubic meters of reserves,
according to OPEC.
RT:We understand that the oil industry in Libya was crippled by the war back in 2011. Do you think that Tripoli needs to take action and regain control of its supplies and maybe even require foreign help to intervene?
Mamdouh G. Salameh: Of course, Tripoli needs to take
action to prevent the separation of the Eastern part of Libya
from the central government of Tripoli. As you appreciate since
the foreign intervention in Libya, Libya’s oil production has
virtually stopped. It used to produce 1.6 million barrels a day
from which it used to export 1 and a quarter million barrels
mostly to Europe. Nowadays Libya is hardly able even to satisfy
domestic consumption and I guess that overland Libya will stop to
be an oil exporter for quite a while, until stability is returned
to the country. That is the price countries like Libya and Iraq
have paid for the chaos inflected on them by western
intervention.
RT:So you don’t think that the Eastern part of Libya
can attract oil partners on its own, independent of Tripoli?
MGS: Well, I don’t think most of the oil importers from
Libya will deal with the Mellitah because they have signed
agreements with the central government of Libya. And the best way
is to deal with the central government of Libya. That’s why
although the Mellitah can smuggle a little bit of oil for sale,
most of the importance, particularly Italy, France and Germany
will very much hesitate to buy oil from the Mellitah, they prefer
to deal with the central government, and to do that the central
government has to bring back stability to the country.
RT:Protesters to the west of Tripoli are also
threatening to stop the gas spots as well. Can Libya’s economy
deal with this turmoil?
MGS: It cannot. As it happens like most of oil producers
in the world, especially in Africa, Asia and the Gulf, the Libyan
budget is dependent to the tune of 85% to 90% on the oil revenue.
They are not earning any revenue now at this minute from oil
exports because there are no oil exports. Sooner or later Libya
will stop even paying salaries to the employees, they delay the
issuing of the budget because they don’t know what revenue they
will be able to get and when they will be able to export oil as
before.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.