Libya calls for western countries to invest in oil industry to support ‘unify’ the country

By African Bulletin on January 27, 2017

The international community has lost moral authority in Libya and can best help the country by acting to end oil smuggling and providing investment to boost production, the chairman of the Libyan National Oil Corporation, Mustafa Sanalla, has said.

Libya has had a self-imposed moratorium on foreign investment in its oil industry since 2011, which Sanalla has announced is to end. A Foreign- Office-backed Libyan investment conference in London on Thursday is attempting to rally financial support to boost the country’s oil output.

Sanalla is the most respected technocrat in a country riven by militias, political deadlock and corruption ever since Muammar Gaddafi was toppled with the help of western forces in 2011. He told the Guardian: “We can use oil to unify the country.”

A restoration of oil production is widely seen as the only way for the debt-ridden Libyan economy to recover. Sanalla has become increasingly outspoken at the failure of the Libyan politicians to reach agreement on the terms of a unity government.

The Tripoli-based, and UN-backed, Government of National Accord led by Fayez al-Sarraj has been at loggerheads with General Khalifa Haftar, the head of the so-called Libyan National Army (LNA), who supports a parallel authority based in eastern Libya. More than a year of talks have produced no compromise.

Sanalla claimed “millions of dollars in proceeds from oil smuggling are now partly in the hands of terrorist groups” as he urged the new administration of Donald Trump to engage with Libya. He warned the groups would try to use the cash to plan further attacks on Europe, as well as funding illegal migration across the Mediterranean.

He said smuggling was taking place by sea and by land through Tunisia and might account for as much as 40% of the country’s consumption.

“There is a connection between the smuggling, migration and terrorism. The volume of money the smugglers are now gathering is hundreds of millions of dollars. With this, they can make terrorist attacks on Europe. It’s a well-organised, systematic, criminal machine. We need international help to bring it to an end,” Sanalla said.

Sanalla said it was possible to boost Libyan oil production to 1.2m barrels a day by the end of the year, but this might require foreign private investment and extra resources from the Libyan central bank to repair the damaged oil fields and ports.

Oil production today stands at 715,000 barrels a day, the highest level in three years. Before the 2011 revolution it was 1.6m, but then blockades saw production fall as low as 200,000, putting the country’s finances into freefall.

The blockades were lifted last year with the help of Haftar and his LNA, but Sanalla said the international community had lost credibility when the UN special envoy, Martin Kobler, showed support for the Petroleum Facilities Guard (PFG), which had imposed them.

“The attempt by the international community to cultivate the PFG as a counterweight to the LNA was a very serious error of judgment. It had nowhere near the 27,800 soldiers it claimed. Most of the names on its books were ghosts that the PFG’s corrupt leadership used to claim salaries and billeting,” Sanalla said.

“The PFG was – and to some extent still is – a criminal organisation that used blockades as a means of extortion and smuggling as a way to raise revenue. Those blockades cost us $130bn (£103bn) in lost exports. How anybody could see this outfit as a constructive partner in rebuilding Libya, I cannot imagine.”

He said a public meeting in July 2016 between Kobler and Ibrahim Jadhran, the head of the PFG, was for many Libyans “a defining moment” in their perceptions of the international community’s intentions.

“I will be very frank. It has cost the international community its credibility in Libya. And it will take consistent, well thought-out action that is clearly in Libya’s interests for the international community to recover its goodwill and moral authority.”

Haftar now controls all the major oil export routes but has agreed that the revenue goes to the central bank in Tripoli.

Sanalla said a security solution would be to bring the salaries of the PFG under the control of the oil corporation.

Sanalla said: “We are now at a critical juncture. It is possible the country’s political leaders may come together to reach a political bargain. Equally, the road ahead may lead to all-out civil war. The situation is that uncertain.”

Sanalla said studies showed that the Libyan oil industry needed investment of between $100bn and $120bn, but it was struggling to get even operating costs from the Tripoli government.

Expressing his frustration at the politicians’ collective failure to reach agreement, he insisted: “I cannot keep waiting for a legitimate Libyan government to be elected. We are on the edge of an abyss and if we do nothing the state disintegrates. The integrity of the [National Oil Corporation] is the best guarantee we have that Libya will be preserved as a unitary state.”

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