OPINION: Renegade General Khalifa Haftar appears to be releasing his stranglehold on Libya’s oil production and export facilities that has led to widespread poverty and power shortages across the country.
The move, designed to relieve pressure on the beleaguered warlord, bodes ill for Opec’s efforts to prop up an oil market reeling from the Covid-19 pandemic.
Haftar gave assurances to the US government last weekend that he was ending his eight-month blockade of the oil facilities.
State-owned National Oil Corporation (NOC) has yet to confirm the restart of crude exports, which have been reduced to a trickle with the loss of billions of dollars in revenue.
NOC, based in the capital Tripoli, is pumping around 80,000 barrels per day compared to one million bpd before the siege.
Haftar has received US assurances that oil revenues would be fairly distributed, with safeguards in place to prevent misappropriation of funds.
The resumption of operations is also expected to expedite efforts towards overhauling security arrangements at NOC facilities that would see the departure of foreign military personnel.
This is easier said than done, given the grip foreign powers hold on sparring parties.
Haftar’s move in lifting the blockade is not all that altruistic, rather reflecting the precarious situation of his self-styled Libyan National Army (LNA) that is squeezed in the west by forces loyal to the UN-recognised Government of National Accord (GNA) and popular resentment at his eastern power base.
Angered by power cuts and falling living standards arising from the blockade imposed in January, protesters vented their fury on the Haftar-backed government's headquarters in the city of Benghazi at the weekend, forcing it to resign.
Anger also erupted for the first time in Al Marj, Haftar’s stronghold.
Libya has been split into rival camps with parallel institutions in the east and the west since 2014.
The east and much of the south is controlled by Haftar's LNA — aligned with the eastern-based government that lacks international legitimacy but is backed by Egypt, Russian mercenaries, France and the United Arab Emirates.
The Tripoli-based GNA, which has also faced repeated protests, enjoys support from Turkey and Qatar.
Foreign intervention has fanned the conflict by ensuring a steady flow of funds and weapons despite a deteriorating local economy hard-hit by the absence of vital oil revenues.
In trying to garner public support for an end to the blockade, NOC says the shutdown is forcing it to use its scarce funds to import fuel to ease rampant power shortages.
"The illegal blockade of NOC’s oil facilities has wrecked the Libyan economy and inflicted misery on every Libyan with the country’s refineries out of action and no oil production for eight consecutive months," the oil company said.
"Production of gas used for power generation has also ground to a halt, forcing NOC to import diesel to supply power plants, further depleting already low cash reserves."
Haftar finally seems to be grasping the sense of a looming economic and social disaster that risks further fragmenting Libya, while allowing outlaw groups to prosper from fuel smuggling and war.
While the end of the siege will be a significant step in easing hardship in Libya, any return of North Africa’s leading exporter to the oil market will pile added misery on Opec as it struggles to mop up a persistent global glut.
(This is an Upstream article.)