Navy SEALs Seize Tanker Seeking to Ship Illicit Libya Oil

March 17 (Bloomberg) -- Bloomberg’s Elliott Gotkine reports on U.S. forces boarding and taking control of an oil tanker in a Libyan port on Bloomberg Television’s “The Pulse.”

U.S. Navy SEALs boarded a tanker carrying oil from a port controlled by rebels in eastern Libya, thwarting the group’s first attempt to sell crude independently of the central government.

Navy SEAL commandos seized the tanker southeast of the Mediterranean island of Cyprus at 10 p.m. Washington time yesterday, or early this morning local time, the U.S. Defense Department said in an e-mailed statement. The Morning Glory, which left the rebel-held Libyan port of Es Sider on March 11 after loading crude, will be re-routed “soon,” with U.S. sailors on board, to a port under the Libyan government’s control, the Defense Department said.

“It’s definitely a setback for the rebels,” Theodore Karasik, director of research at the Dubai-based Institute for Near East and Gulf Military Analysis, said today by telephone. “It shows the government has the backing of the international community, and it makes it more difficult for the rebels to become autonomous by selling oil.”

Related: Libya Peace Seen Complicated by Oil Cargo From Rebel Port

The failure of Libyan government forces to prevent the Morning Glory from sailing away triggered the parliament’s ouster of Prime Minister Ali Zaidan and his replacement with Defense Minister Abdullah Theni. Federalists in the eastern Barqa region, also known by its historic name Cyrenaica, occupied four of Libya’s nine oil ports at the end of July, including Es Sider, the largest.

Photographer: Shawn Baldwin/Bloomberg

Libya’s central government has been hobbled by a lack of oil revenue since the ouster of Muammar Qaddafi in 2011. Crude production slumped to 350,000 barrels a day last month, from an average of 1.59 million barrels in 2010. Close

Libya’s central government has been hobbled by a lack of oil revenue since the ouster... Read More

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Photographer: Shawn Baldwin/Bloomberg

Libya’s central government has been hobbled by a lack of oil revenue since the ouster of Muammar Qaddafi in 2011. Crude production slumped to 350,000 barrels a day last month, from an average of 1.59 million barrels in 2010.

Global Impact

Libya’s central government has been hobbled by a lack of oil revenue since the ouster of Muammar Qaddafi in 2011. Crude production slumped to 350,000 barrels a day last month, from an average of 1.59 million barrels in 2010. The deadlock in Libya, a member of the Organization of Petroleum Exporting Countries, has global implications, with Citigroup Inc. analysts citing it as one of the reasons they raised their 2014 forecast for Brent crude to $103 a barrel, from $93, last month.

“No one was hurt tonight when U.S. forces, at the request of both the Libyan and Cypriot governments, boarded and took control of the commercial tanker Morning Glory, a stateless vessel seized earlier this month by three armed Libyans,” the Defense Department said. The SEAL team operated from the guided missile destroyer USS Roosevelt, it said.

U.S. Companies

Libya guaranteed the safety of the tanker’s crew, saying the mariners would be treated according to international and national laws, the government said today in a statement on its website.

The Morning Glory was flying the North Korean flag when it arrived at Es Sider. North Korea’s Maritime Administration said March 13 that it canceled the ship’s registry after receiving a notice from Libya.

The U.S. State Department warned on March 10 of possible sanctions against any buyers of the vessel’s cargo, as the crude came from Waha Oil Co., a joint venture between Libya’s state-run National Oil Corp. and U.S.-based Marathon Oil (MRO) Corp., Hess Corp (HES) and ConocoPhillips. (COP) A spokesman for the self-declared Executive Office for the Barqa region, Ali Al-Hasy, said March 12 that the rebel group would preserve the U.S. companies’ share of any proceeds from a sale.

The tanker episode could help rekindle negotiations between the central government and the rebels on a formula to share oil revenue, or it could heighten tensions between them, said Karasik, the analyst. “It could go either way,” he said.

Tribal Mediator

A tribal mediator asked the government to pull back military units that deployed in central Libya with the aim of recapturing Es Sider and the nation’s second-largest port Ras Lanuf, the official news agency Lana reported today. The central government gave the eastern rebels a two-week deadline on March 12 to withdraw from the oil ports.

“The government has to sit with these young people,” said Saleh Al Etweish, head of the Magharba tribe, to which Ibrahim Al Jadran, the rebel leader, belongs.

The Barqa rebels are demanding a 15 percent share of national oil revenue for the eastern region. They say the territory, which has capacity to produce more than half of Libya’s oil, was neglected in favor of Tripoli and other cities in western Libya under Qaddafi’s four-decade rule.

The government so far refused to commit to an agreement on revenue-sharing, saying Libya must first adopt a constitution.

To contact the reporter on this story: Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Bruce Stanley

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