Washington Post: U.S. Initiative Faces Growing Pressure as Major American Oil Company Leaves Libya

The Washington Post reported Monday that the Trump administration’s efforts to open Libya’s oil sector as an alternative source of Gulf supplies amid the war with Iran are facing growing obstacles following an assassination, the resignation move by the governor of the Central Bank, and a week of drone attacks and explosions that continued through Sunday.

The American newspaper reported that an explosion over the weekend at a substation at the Zawiya oil complex cut electricity to Tripoli, Zawiya, Sabratha, Surman, and Gharyan, according to Libya’s General Electricity Company. Officials are investigating whether the incident was linked to a series of armed drone attacks.

The newspaper noted that the same power station had been attacked four days earlier by a drone loaded with explosives, causing a power outage and prompting General Electric to suspend its operations and withdraw its technical teams from the nearby facility, which Chevron and ExxonMobil are counting on as they enter the Libyan market. Over the past week, an oil refinery, a power station, substations, and storage tanks near the coastal city of Zawiya were subjected to at least six drone attacks. Zawiya is located about 30 miles west of Tripoli.

According to the newspaper, the day before, the governor of the Central Bank of Libya, who deals with leaders on both sides of the divided country, submitted his resignation. However, both Benghazi and Tripoli rejected it. In less than two weeks, Libya’s energy infrastructure, security system, and main economic institution linking the eastern and western parts of the country came under simultaneous pressure. These are the same three pillars identified by Massad Boulos, President Trump’s senior adviser for Arab and African affairs, in Washington in April as the foundation for reunifying Libya and opening more of its oil sector to American companies.

Iran’s closure of the Strait of Hormuz has choked one of the maritime routes through which roughly one-fifth of the world’s oil and liquefied natural gas supplies normally pass, making Libya part of Washington’s efforts to address the situation with Tehran.

Boulos said in April that Libya would reach short-term production of 1.6 million barrels of oil per day, followed by between 2 million and 3 million barrels per day by the end of the decade.

Chevron’s return to Libya was the largest move by a U.S. oil company in the country in decades.

The newspaper added that the company won a contract in the Sirte Basin earlier this year, followed by ExxonMobil signing an agreement covering four offshore areas. Libya holds 41% of Africa’s proven oil reserves, the largest share among the continent’s countries.

Libya reported production of 1.44 million barrels per day in June, its highest level since 2013, but still below the 1.6 million barrels per day it was producing before the 2011 uprising, which ultimately led to the country’s division.

The Zawiya refinery, located near Tripoli, processes around 120,000 barrels per day. It receives supplies from the Sharara field, approximately 450 miles away. The field is operated by Spain’s Repsol in cooperation with France’s TotalEnergies, Austria’s OMV, Norway’s Equinor, and Libya’s National Oil Corporation.

However, Libya’s instability threatens U.S. interests across the wider region, according to Austrian security analyst Wolfgang Pustai, who previously served as a defense attaché in Libya and chairs the advisory council of the National Council on U.S.-Libya Relations.

The newspaper said Washington’s objectives include stabilizing the country, countering Russia’s military presence in Africa, increasing Libyan oil production, controlling migration to Europe, and countering Chinese influence over minerals in southern Libya.

It noted that Boulos’s initiative increasingly represents an opportunity to strengthen U.S. interests based on the current situation.

Hani Al-Asar, executive director of Egypt’s National Center for Studies, said: “We cannot treat the three events as three separate incidents, nor can we jump to the conclusion that a single conspiracy is behind them.”

He added that the more important point is that Libya’s security, energy, and economic institutions came under pressure at the same time Washington was attempting to link these institutions together.

Omar Khatali, a Libyan-American adviser who previously managed the real estate investment fund of Libya’s sovereign wealth fund and visited Tripoli in late July, said that, in terms of those behind the attacks, the three strikes are not connected to one another but are linked through the weakness of the Libyan state structure at present. “The whole thing is about money, power, and control,” according to the newspaper.