Libyan energy infrastructure

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From STRATFOR

Summary

The heads of several oil companies in eastern Libya’s Gulf of Sidra region announced Feb. 23 they had "pledged loyalty to the people" and were splitting from Moammar Gadhafi’s regime. The Gulf of Sidra is critical to Libya’s energy exports and its major ports handle approximately 77 percent of Libya’s oil exports. It is still very early in the conflict, but if eastern forces gain control over this region, it could provide crucial strategic depth in their fight against Tripoli.

Analysis

The Gulf of Sidra is critical to Libya’s energy exports. The ports of As Sidra, Marsa el Brega, Ras Lanuf, Tobruk and Zuetina handle approximately 77 percent of Libya’s oil exports. Allegiances in the Gulf of Sidra and the economic value they represent, therefore, are key to the survival of Gadhafi’s regime.

According to the report, the defecting directors came from the Arabian Gulf Oil Company and the Sirte Oil Company, both regional subsidiaries of Libya’s state-owned National Oil Corporation. The Benghazi-based Arabian Gulf Oil Company operates the Nafoora, Messla and Sarir oilfields in Libya; Marsa el Brega-based Sirte Oil Company runs the Marsa el Brega refinery, which has a maximum capacity of about 200,000 barrels per day (bpd), but sanctions have limited its actual production to about 18,000 bpd. The three oilfields are now allegedly under the control of the Zawiya tribe, which has threatened to stop the flow of oil to western Libya if authorities do not halt their operations against Libyan protesters. Oil appears to be flowing from the fields for now as the Zawiya tribe appears to be cooperating with oil companies, but it appears that the refinery of Marsa el Brega and several of the oilfields that supply it and other ports have fallen out of the control of the government.

On Feb. 22, a Filipino information technology worker living in Benghazi told Filipino news agency GMA that he had been transferred from Benghazi to Marsa el Brega because "the military has taken control" there. Given the large-scale military defections elsewhere in the country’s east, it is unclear if the worker was speaking of Gadhafi loyalists or breakaway factions.

In addition to the statements from the oil companies, anti-Gadhafi protesters claimed control over Ajdabiya, also along the Gulf of Sidra and adjacent to the strategic port of Zuetina. While there is little anecdotal evidence from Zuetina, the protesters’ proximity is a sign that the port and oil terminal are at serious risk of falling out of the government’s control. Farther to the east, the port of Tobruk has broken away from Gadhafi, bringing with it the terminal that services the Sarir oilfield.

This also means that around three-quarters of Libya’s oil export revenue, which was $30 billion in 2009, goes abroad via the Gulf of Sidra. Additionally, the Ras Lanuf oil refinery is Libya’s largest export refinery, with a throughput of 220,000 bpd. Western Libya does have the 110,000 bpd Elephant oilfield and the Greenstream natural gas pipeline, with a capacity of 10 billion cubic meters per year, which pipes essentially all of Libya’s produced natural gas to Italy. However, the revenue from natural gas is far smaller, at only around $3.8 billion in 2009.
Currently, the fluid situation in eastern Libya makes it difficult to draw boundaries between cities controlled by pro- and anti-Gadhafi forces. While there appears to be an east-to-west domino effect, protests are still contained in individual cities, and their success in recruiting the support of local tribes, military forces or business leaders is different from city to city. Geographic limitations will further constrain the ability of protesters in these cities to coalesce for a push westward.
As of now, there are no reports of protesters taking control or business or military leaders defecting in Ras Lanuf or As Sidra. Without evidence to the contrary, STRATFOR must assume that those cities not claimed as being controlled by anti-Gadhafi forces are still under Gadhafi’s control. That being the case, it appears that the allegiance in the Gulf of Sidra is geographically split between Marsa el Brega to the east and Ras Lanuf to the west, with Ras Lanuf being more important overall to Libya’s economy.
Finally, in addition to defections in the energy industry hurting the Gadhafi regime in the immediate future, their allegiance "to the people" may provide an economic and strategic underpinning to a secessionist movement in eastern Libya. It is still very early in the conflict, and there is no indication that anti-Gadhafi forces are consolidating in eastern Libya, but control of the Gulf of Sidra could provide crucial strategic depth to a region of Libya that is breaking away from Tripoli’s control.