Fight for control of Libya’s Central Bank leads to oil terminals’ shutdown
The image displays the Bouri Offshore Field located north of the Libyan coast in the Mediterranean Sea. Image: Risk Intelligence Gallery
9 September 2024
The Force Majeure on oil exports declared by the eastern Libyan government comes in reaction to the perceived efforts by its Tripoli-based adversary to seize control of the Central Bank of Libya.
By Kais Makhlouf, MENA Analyst
Western Libya is going through yet another period of instability under Government of National Unity’s (GNU) Prime Minister Dbeiba, who is seeking control of new sources of income for his discretionary spending. This is highly likely caused by the necessity to keep purchasing militias' assent to his continued rule, which in the eyes of many, serves his pursuit of personal enrichment. As part of that effort, PM Dbeiba has sought to remove the governor of the Central Bank of Libya (CBL), El Kebir, who has proven too autonomous for PM Dbeiba's plans. The political fight in Tripoli, where institutions are based, is around various factions' acceptance of PM Dbeiba's attempt to seize control of the CBL.
The nucleus of the Libyan state is the NOC-CBL duo. The National Oil Corporation (NOC) generates income from oil and the funds are controlled by the CBL. For all intents and purposes, these two institutions represent what is left of the Libyan state, and represent over 90% of its budget, which is distributed via the CBL to both the Libyan National Army (LNA, the GNU’s major rival and the power behind the rival government in eastern Libya) and GNU following negotiations between both sides. Should PM Dbeiba succeed in asserting control over the CBL, he would in all likelihood starve the LNA for cash and further his own rule.
The LNA under Khalifa Haftar, based in the east, is wary of such an outcome, as it also relies on the redistribution mechanism ensured by the NOC-CBL system. In protest at Dbeiba's perceived cash-grab, and with most of the oil producing infrastructure within its territory, the LNA has therefore decided to declare Force Majeure on the production, stopping formal exports through the NOC-CBL system. The Force Majeure declared on 26 August is therefore expected to last until a resolution of the CBL dispute has been found to the LNA's satisfaction. That the NOC itself recently declared Force Majeure on fields in the west is further indication that the crisis may not be solved in short order.
This does not mean that exports from the country have ceased abruptly. Reserves at the terminals exist, and likewise, there are strong suspicions that semi-formal export networks have emerged. In that context, the LNA is notably thought to authorise exports of Libyan oil outside of the CBL’s purview.
This latest crisis compounds several other minor ones in the west of the country, and armed groups are likely sensing an opportunity to seize new turf. This is notably the case of PM Dbeiba-aligned miltiias who have demanded that militias stay in their bases until the CBL issue is fixed and stated that they would assure security in the interim. This has been very poorly received by other militias seeing a thinly veiled attempt by Dbeiba's friends to seize their turf and assets. Militias are therefore mobilising, including from outside of Tripoli, in the expectation that an armed confrontation will allow for a redrawing of the map.
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