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Libyan Oil Production Continues To Decline Amid Chaos

Four years after NATO’s intervention in Libya to overthrow Moammar Gaddafi, the country is suffering from a multitude of crises including a shortage of oil exports.

Recently, Western countries warned Libya may face bankruptcy as a result of both the drop in oil prices and Libya’s oil production.

Brent crude oil prices, the international standard for prices, are above $55 per barrel. Libya, noted by the Energy Information Administration as holding Africa’s “largest proved crude oil reserves,” would need prices to be $184 per barrel just to achieve a balanced budget.

Overall, the country is producing less than 275,000 barrels per day, which is less than the 1.6 million produced before the 2011 intervention.

The reason for the major drop in production is the conflict ongoing in the country, which led to the deaths of at least 2,500 people last year, between the internationally recognized government in the east, supported by former General Khalifa Hifter and his Dignity movement, and Libya Dawn in the west, which was set up in response to Dignity.

While the situation may be simple, it is a far more complicated as Frederic Wehrey pointed out in a recent piece for The Atlantic:

The notion of a Libyan army—on either side of the conflict—is largely a fiction. What exists instead is a loose constellation of armed groups.

These armed groups are taking advantage of a broken society with no government having the same amount of control Gaddafi’s government had. Indeed, journalist Sarah Topol highlighted in a piece last year for Harper’s Magazine the “gold mines” in Libya—abandoned weapons. A U.N. official told Topol how Libya was an “open warehouse” where weapons such as anti-aircraft missiles could be easily obtained.

Topol later elaborated on the difficulties of pinpointing what is truly happening in Libya, although knew smugglers were taking weapons left literally out in the open and trading them across Africa:

I could not confirm who anyone was, nor many of the things that they had told me: all I could verify was that Libya was awash in weapons and that the smuggling machine was working.

With easy-to-obtain weapons, fighting in the country is more likely to persist. It is affecting oil output so much so that the country’s state-run oil firm warned all production may cease should it continue.

Plus the country is currently suffering from presence of militias tied to the Islamic State, which recently attacked an oil port in northern Libya and beheaded 21 Coptic Christians from Egypt.

As a result of ISIS, intervention is once again on the minds of some Western officials. Despite Italian Foreign Minister Paolo Gentiloni saying Italy was “ready for war” in Libya, Westerners are hesitant in case new problems erupt. An anonymous diplomat who was based in Tripoli told Al-Monitor success for any coalition could not depend on current groups in Libya.

In addition, the European Union is considering an oil embargo on Libya to force both sides to a ceasefire, although it may be an option of last resort due to the consequences involved.

The situation, in general, is dire. The government warned wheat reserves would dry up in two to three months. Electricity goes on and off throughout the country as a result of the two governments. It is much worse than anyone may have expected in 2011.

It is difficult to say whether military intervention would make a difference. The African Union said late last month a political, not a military, solution between Libyans would be needed. In fact, Libyan Foreign Minister Mohamed Dayri mentioned it as the “only solution.”

Yet, if Libya miraculously was able to escape from instability, low oil prices would make a recovery difficult. Oil provides at least 90 percent of its revenues. The country would be forced to implemented austerity as it is doing now.

Oil is so vital and important in Libya that Dayri warned extremists in the country would try to capture oil to fund terrorism overseas.

All of this occurs more than 10 years after Libya agreed to dismantle its weapons of mass destruction in return for Western benefits. Saif ul-Islam Gaddafi remarked the benefits offered by the West were “really great.” He elaborated the agreement, which was officially announced in 2004, would benefit Libya in the long-run:

The leader concluded that if this problem is solved, Libya will end its international isolation and become a dialogue partner to the powerful nations, and that it could work with them to change the Arab situation,

In general, Gaddafi believed the “backing of the West” would help “achieve in a few years what [we] could not achieve in 50.”

He is now under arrest by authorities in Libya, who refuse to hand him to the International Criminal Court.

Such words by Gaddafi are ominous as neither the West or the United States are heavily interested in Libya as they were once before. Journalist Sam Knight wrote “the US is somewhat contrite about its prominent role in the tragedy.”

For Libyans, the post-NATO intervention period was a failure as instability grew in the country. Nicolas Pedham, a journalist for The Economist, believed the situation would escalate into further violence as a result of lack of leadership. In fact, he notes those who may have helped craft a stable state immediately left after realizing how hopeless the situation was:

Exiles who jubilantly if naively returned to build a new post-Qaddafi order have almost all left. Many more would have gone with them had Europe’s consulates not all withdrawn and with them any hope of a visa. Libya’s neighbors periodically close their borders. And flights out of Libya are in jeopardy too after rival armed groups began targeting the country’s airports. Libya should be one of the world’s richer states but many facilities and power stations have been set aflame as Libya Dawn battles for control of the oil terminals along the Gulf of Sirte coast.

It may have been one of the richer states, but it now stands as a failed state with no solutions to its crises. Indeed, the world’s scramble to produce more oil to gain a share of the pie will only add more problems to the country’s woes.

CommunityThe Bullpen

Libyan Oil Production Continues To Decline Amid Chaos

Four years after NATO’s intervention in Libya to overthrow Moammar Gaddafi, the country is suffering from a multitude of crises including a shortage of oil exports.

Recently, Western countries warned Libya may face bankruptcy as a result of both the drop in oil prices and Libya’s oil production.

Brent crude oil prices, the international standard for prices, are above $55 per barrel. Libya, noted by the Energy Information Administration as holding Africa’s “largest proved crude oil reserves,” would need prices to be $184 per barrel just to achieve a balanced budget.

Overall, the country is producing less than 275,000 barrels per day, which is less than the 1.6 million produced before the 2011 intervention.

The reason for the major drop in production is the conflict ongoing in the country, which led to the deaths of at least 2,500 people last year, between the internationally recognized government in the east, supported by former General Khalifa Hifter and his Dignity movement, and Libya Dawn in the west, which was set up in response to Dignity.

While the situation may be simple, it is a far more complicated as Frederic Wehrey pointed out in a recent piece for The Atlantic:

The notion of a Libyan army—on either side of the conflict—is largely a fiction. What exists instead is a loose constellation of armed groups.

These armed groups are taking advantage of a broken society with no government having the same amount of control Gaddafi’s government had. Indeed, journalist Sarah Topol highlighted in a piece last year for Harper’s Magazine the “gold mines” in Libya—abandoned weapons. A U.N. official told Topol how Libya was an “open warehouse” where weapons such as anti-aircraft missiles could be easily obtained.

Topol later elaborated on the difficulties of pinpointing what is truly happening in Libya, although knew smugglers were taking weapons left literally out in the open and trading them across Africa:

I could not confirm who anyone was, nor many of the things that they had told me: all I could verify was that Libya was awash in weapons and that the smuggling machine was working.

With easy-to-obtain weapons, fighting in the country is more likely to persist. It is affecting oil output so much so that the country’s state-run oil firm warned all production may cease should it continue.

Plus the country is currently suffering from presence of militias tied to the Islamic State, which recently attacked an oil port in northern Libya and beheaded 21 Coptic Christians from Egypt.

As a result of ISIS, intervention is once again on the minds of some Western officials. Despite Italian Foreign Minister Paolo Gentiloni saying Italy was “ready for war” in Libya, Westerners are hesitant in case new problems erupt. An anonymous diplomat who was based in Tripoli told Al-Monitor success for any coalition could not depend on current groups in Libya.

In addition, the European Union is considering an oil embargo on Libya to force both sides to a ceasefire, although it may be an option of last resort due to the consequences involved.

The situation, in general, is dire. The government warned wheat reserves would dry up in two to three months. Electricity goes on and off throughout the country as a result of the two governments. It is much worse than anyone may have expected in 2011.

It is difficult to say whether military intervention would make a difference. The African Union said late last month a political, not a military, solution between Libyans would be needed. In fact, Libyan Foreign Minister Mohamed Dayri mentioned it as the “only solution.”

Yet, if Libya miraculously was able to escape from instability, low oil prices would make a recovery difficult. Oil provides at least 90 percent of its revenues. The country would be forced to implemented austerity as it is doing now.

Oil is so vital and important in Libya that Dayri warned extremists in the country would try to capture oil to fund terrorism overseas.

All of this occurs more than 10 years after Libya agreed to dismantle its weapons of mass destruction in return for Western benefits. Saif ul-Islam Gaddafi remarked the benefits offered by the West were “really great.” He elaborated the agreement, which was officially announced in 2004, would benefit Libya in the long-run:

The leader concluded that if this problem is solved, Libya will end its international isolation and become a dialogue partner to the powerful nations, and that it could work with them to change the Arab situation,

In general, Gaddafi believed the “backing of the West” would help “achieve in a few years what [we] could not achieve in 50.”

He is now under arrest by authorities in Libya, who refuse to hand him to the International Criminal Court.

Such words by Gaddafi are ominous as neither the West or the United States are heavily interested in Libya as they were once before. Journalist Sam Knight wrote “the US is somewhat contrite about its prominent role in the tragedy.”

For Libyans, the post-NATO intervention period was a failure as instability grew in the country. Nicolas Pedham, a journalist for The Economist, believed the situation would escalate into further violence as a result of lack of leadership. In fact, he notes those who may have helped craft a stable state immediately left after realizing how hopeless the situation was:

Exiles who jubilantly if naively returned to build a new post-Qaddafi order have almost all left. Many more would have gone with them had Europe’s consulates not all withdrawn and with them any hope of a visa. Libya’s neighbors periodically close their borders. And flights out of Libya are in jeopardy too after rival armed groups began targeting the country’s airports. Libya should be one of the world’s richer states but many facilities and power stations have been set aflame as Libya Dawn battles for control of the oil terminals along the Gulf of Sirte coast.

It may have been one of the richer states, but it now stands as a failed state with no solutions to its crises. Indeed, the world’s scramble to produce more oil to gain a share of the pie will only add more problems to the country’s woes.

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Brandon Jordan

Brandon Jordan

Brandon Jordan is a freelance journalist in Queens, NY and written for publications such as The Nation, In These Times, Truthout and more.