Libya's key oil corporation shuns neutrality and slams warlord Haftar

After maintaining neutrality for the last five years in the Libyan conflict, Libya's National Oil Corporation (NOC) slammed warlord Khalifa Haftar on July 12, saying Haftar blocked their oil production on the instruction of the UAE. 

The NOC's shifting stance comes a year after the US extended full support to the oil corporation, urging it to maintain a neutral position in the tussle. 

As Haftar continued to use the NOC as a pawn against the UN-recognised Government of National Accord (GNA), in January, America adopted tough rhetoric against Haftar when it demanded "an immediate resumption of Libya's lifeline oil exports".

Haftar, as per the latest news reports, is hellbent on continuing to block oil production until his conditions are accepted. Haftar's so-called spokesperson, Ahmed al Mismari, demanded a share in the oil revenue and for the subsequent amount to be deposited in a third-country bank account. Mismari also demanded an audit at the Libyan Central Bank. 

In response, the NOC, which is the only legitimate organisation that can sell Libyan oil in global markets, condemned the warlord for renewing the blockade on oil exports.

The NOC said that the corporation has been informed of Haftar’s dancing to the UAE's tune and that he was shutting down the NOC's production lines on the oil-rich kingdom's instruction. 

"This is gravely disappointing, especially following repeated statements by very senior representatives of the UAE last week in support of international efforts to restart oil production in Libya," the NOC said, adding that the states responsible for the blockade must be held to account by the United Nations Security Council.

"NOC has been forced to declare force majeure on all oil exports from Libya to limit its contractual liabilities."

The oil exports were already restarted on Friday after six months of blockade - that was until Haftar ordered his militias to halt further exports the next day, reversing their cooperative posture in negotiations.

Talking about the issue, the NOC said; "Wagner and Syrian mercenaries now occupy Es Sider oil port and Wagner and Sudanese mercenaries are camped within the vicinity of the Sharara oil field, preventing Libyan oil from flowing. NOC urges all mercenaries to withdraw from Libyan oil facilities."

NOC Chairman Mustafa Sanallah said they greatly appreciate the efforts of the United Nations and the US in trying to restart Libyan oil production in order to avoid an escalation in the conflict.

"If these efforts fail, as it appears they will, there must be consequences for the actions of the handful of states that are undermining the rules-based international order and destroying Libya. They pose a grave threat to Libyan and global security,” Sanallah added.

He also stated that the NOC’s position during the negotiations was clear: it supports all measures to bring transparency to state financial arrangements, and it opposes any that undermine Libyan sovereignty.

"The renewed blockade demonstrates the urgent need for moves to improve financial transparency to be accompanied by reform of security at oil installations.”

Haftar has faced a series of blows in the recent past. The GNA has made significant territorial gains since March this year, making Haftar's desire to rule over the country far from his grasp. Haftar also faced intense criticism for his reported collaboration with Russia, and overseeing burials in mass graves.  

NOC’s stance during the Libyan conflict

The NOC was founded in 1970 to oversee operations within the oil sector. It mainly focuses on developing innovative plans to grow petroleum production in the region and monitoring operations and investment opportunities for the reserves of petroleum extracted. 

Fully-owned companies by the NOC include Sirte Oil Company, Arabian Gulf Oil Company, and Brega Petroleum Marketing Company.

The Tripoli-based NOC previously said it is neutral and deals with all parties in Libya’s conflict - it has historically also warned that any shutdowns could have a lasting impact.

However, since 2011, the NOC has become more political as all stakeholders in Libya needed to support it in order to survive. 

Despite this fact, in 2016, Haftar seized most facilities in Libya’s east, and this year, his militias swept through the south, taking control of the major El Sharara and El Feel oil fields. 

Haftar also circumvented the NOC to export oil directly even though he cannot legally do this due to the resolutions of the United Nations Security Council, which reserves that right for the NOC. 

The illegal export of Libyan oil only harms the long-term prospects of the Libyan oil sector as it erodes any confidence in international investors and business partners.

The NOC in Tripoli strived to maintain its neutrality. But the eastern government, allied to Haftar's LNA, has set up a parallel NOC in Benghazi that has repeatedly tried and failed to wrest control over some of Libya’s oil exports. 

In 2018, Haftar made an attempt to sell oil but the US was quick to intervene, warning him of the consequences. Haftar then restored control of the oil resources to the NOC, ensuring that the revenues collected from such a business went to the country's Central Bank. All warring factions accept both the NOC and Central Bank, and any attack on the two institutions would mean an attack on the US. 

Libya has the largest oil reserve in Africa and can produce 1.2 million barrels of crude oil per day. But the production has fallen below 100,000 barrels due to the interruptions by the pro-Haftar militias over the past six months.

Despite being very rich in terms of oil, its people are experiencing long queues at the fuel pumps. According to some experts, this is because Haftar suffered heavy losses against the UN-backed GNA forces. 

Haftar is under considerable international pressure and is seeking a way out for political negotiations. Many regional experts argue that he desires to use oil production as a bargaining tool.