East Libya to Ship More Oil While UN Slams Sales as Illegal

  • First cargo adrift in Mediterranean after Malta barred entry
  • National Oil Corp. in east Libya expects payment in a month

Authorities in eastern Libya pledged to export more crude oil soon, two days after shipping their first cargo in defiance of a national unity government based in Tripoli.

A representative of the National Oil Corp. based in eastern Libya said he expected payment within a month for the shipment. A separate branch of the company based in Tripoli, in the west of the divided country, said it hoped international forces would seize the “illicit” cargo. A United Nations official condemned the sale, while the buyer of the crude said it was legitimate.

Libya, with Africa’s largest proven crude reserves, split into two separately governed regions in late 2014. The western region, centered around Tripoli, is home to the nation’s official oil company, while the internationally recognized government is based in the east. Libyans are currently working with foreign support to set up a Government of National Accord that would represent both factions.

The tanker Distya Ameya loaded crude at eastern Libya’s Hariga port on Monday. The NOC leadership in Tripoli, which is recognized by international traders such as Glencore Plc and Vitol Group as the country’s official crude marketer, has repeatedly warned the NOC administration in the east against making its own shipments. The vessel carrying the cargo was stranded in the Mediterranean Sea east of Malta after the island state refused entry. 

International Forces

“The ball is in the court of the international community,” Mohamed Elharari, spokesman for the NOC in Tripoli, said by phone Wednesday. “We are waiting for the coalition forces to return the cargo to Libya.”

In 2014, U.S. Navy SEALs seized a crude tanker that rebels tried to ship from central Libya. The ship was subsequently re-routed to a port under the control of the Tripoli authorities. Martin Kobler, head of the United Nations Support Mission in Libya, cited Wednesday in a Twitter post the UN Security Council Resolution 2278, which “condemns attempts to illicitly export crude oil from Libya.”

The NOC based in eastern Libya expects payment within a month for the shipment of 650,000 barrels of crude, Chairman Nagi Elmagrabi said Wednesday by phone. The money will be deposited into an account at Bank Al Etihad in Jordan, he said, without disclosing the amount.

Legitimate Cargo

“We are planning to export more crude shipments in the near future,” Elmagrabi said.

DSA Consultancy, which operates from Dubai and was identified by Elmagrabi as the buyer of the shipment, said the cargo was legitimate.

“DSA always work strictly within the local and international legal frameworks, as of today DSA is not in receipt of any legal basis for challenging the cargo’s legitimacy,” it said in an e-mailed response to questions.

Libya’s oil production has fallen by 100,000 barrels a day due to a lack of port-storage capacity at Hariga, an Arabian Gulf Oil Co. official said Wednesday. The company, an NOC unit known as Agoco, reduced output to 130,000 barrels a day from 230,000 barrels, the official said, asking not to be identified because of company policy. A tanker moored now at Hariga has been blocked from loading a cargo of 1 million barrels, and Agoco may need to halt production in four days if the situation persists, the official said.

Armed Militias

Libya pumped about 1.6 million barrels a day of crude before the 2011 rebellion that ended Moammar Al Qaddafi’s 42-year rule. It’s now the smallest producer in the Organization of Petroleum Exporting Countries, pumping 330,000 barrels a day in March, data compiled by Bloomberg show. Since Qaddafi’s ouster and death, armed militias are also competing for control of the nation’s oil facilities.

The NOC in eastern Libya has been trying for several months to export oil independently, Riccardo Fabiani, North Africa analyst with the Eurasia Group, said by phone from London. The eastern administration needs the revenue such sales can generate, but its main goal is to undermine the Government of National Accord, he said.

“No one is willing to accept that the eastern government is able to sell oil independently because it would have devastating consequences for Libya,” Fabiani said. “It would be much, much harder to form a national unity government in that case.”

The cargo refused by Malta was sold to DSA Consultancy FZC, a company based in the United Arab Emirates, according to Elmagrabi of the eastern NOC.

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