Oil Tanker Mardi Completely Disappears After Smuggling 13,000 Tons of Diesel in Benghazi Port – Financial Times Unveils Hidden Details

The Financial Times reported on Friday that in late March 2024, the oil tanker “Mardi,” flying the flag of Cameroon, vanished from ship tracking databases after spending two days roaming the Mediterranean east of Malta. It reappeared a month later in northern Libya.

According to the newspaper, “Mardi” is one of 48 vessels identified by a UN expert panel monitoring Libya. In their latest report from December, they stated that the tanker had made 14 visits to Benghazi port and smuggled more than 13,000 tons of diesel between March 2022 and October 2024, violating UN sanctions on Libya.

The report also noted that the International Maritime Organization has no information on the owner of “Mardi.”

UN experts indicated that smuggling is facilitated through a controversial barter system, where Libya, lacking large-scale fuel refining capacity, exchanges its crude oil production for refined fuel instead of purchasing it with cash. The fuel is sold domestically at heavily subsidized prices.

Illicit Oil Trade Keeping Libya Divided

The report states that subsidized fuel is smuggled out of the country and sold, helping to sustain competing political factions. However, some of this imported cheap fuel is also smuggled abroad and sold at black market rates or with forged documents at market prices. This system generates a steady revenue stream for armed groups linked to the rival factions controlling Libya.

Charles Cater, director of investigations at The Sentry, an investigative organization tracking corruption, stated that while entire regions of Libya frequently suffer from fuel shortages, the country’s rulers appear content with the massive fuel swap program.

According to the Financial Times, the dollar value of the oil exchanged more than doubled, reaching $8.65 billion between 2021 and 2023. Critics argue that the system is opaque and lacks oversight.

Wolfram Lacher, a researcher at the German Institute for International and Security Affairs, described the system as turning fuel imports into a “black box.” The National Oil Corporation (NOC) did not respond to requests for comment. Meanwhile, data from commodities consultancy Kpler shows that Libya’s fuel imports nearly doubled, from 5.5 million tons in 2020—before the barter system—to 10.35 million tons in 2024.

A senior diplomat familiar with Libyan affairs estimated that Benghazi’s fuel exports generate millions of dollars. A World Bank report published in October 2024 estimated Libya’s annual losses due to illicit trade at over $5 billion.

The report also highlighted that “fuel smuggling from Benghazi port has significantly increased since the war in Ukraine.”

The rise in imports has further strained Libya’s struggling economy by increasing subsidy costs. In a letter to Prime Minister Dbeibah in March 2024, then-Central Bank Governor Sadiq Al-Kabir warned that the country’s annual fuel import costs of $8.5 billion “exceed Libya’s actual needs.”

He noted that subsidies had tripled to $12.5 billion between 2021 and 2023, with fuel subsidies accounting for $8.4 billion of the total annual figure.

Al-Kabir, whom Dbeibah dismissed in August, stated: “Our objection was that one liter of fuel costs us a dollar but is sold for three cents. This costs the state enormous sums, and a large portion of this fuel is smuggled abroad.”

According to an Audit Bureau report, three subsidiaries of the “BGN” company received a total of $2.7 billion worth of crude oil in 2023 under the barter system, representing 30% of the trade volume and the second-largest share after Gulf Upstream.

In a statement, BGN claimed that it operates in full compliance with all regulations governing oil trading in Libya through transparent and official communication with the National Oil Corporation and relevant authorities.

The company stated that it is “fully qualified” to participate in the barter system, being “one of 12 companies selected in 2021 through a transparent and competitive bidding process involving 20 eligible local and international firms.”

Signs the Barter System May Be Ending

There are now indications that the barter system may be coming to an end due to increasing local and international pressure. In a mid-January letter seen by the Financial Times, Libya’s Attorney General ordered the National Oil Corporation to “immediately cease” the practice of crude-for-fuel swaps and adopt contracting mechanisms ensuring transparency in fuel supply agreements.

The letter also stated that fuel smuggling had surged due to the barter system, which it claimed did not serve the public interest.

A senior diplomat remarked that “international and domestic pressure has escalated, possibly leading the beneficiaries of this system to decide that now is the time to stop, as the risks outweigh the benefits.”

The newspaper further reported that in November, then-NOC chairman Farhat Bengdara was summoned by the Attorney General for a meeting to discuss the barter system, alongside the head of the Audit Bureau and the new Central Bank Governor.

Two sources familiar with the meeting said that Bengdara was “shocked” by the extent of details the Attorney General had gathered about the alleged corruption and agreed to end the barter system by early 2025. However, he suddenly left his position in mid-January, citing health reasons, and did not respond to requests for comment.

His successor, Masoud Suleiman, informed the Prime Minister in a letter seen by the Financial Times that the NOC would halt the barter system starting in March but would not be responsible for fuel shortages if authorities failed to provide adequate funds for imports.

However, Libyan experts believe that revenue flows from the system are likely to continue even after its official termination. Some point to Arkeno Oil, a company founded in 2023 that has, according to shipping documents, exported several crude oil shipments since early 2024.

Previously, direct sales of Libyan crude oil were managed by the NOC and foreign companies with joint ventures, such as Italy’s Eni, France’s TotalEnergies, and Austria’s OMV. Arkeno, originally an oil services company, is now the first private Libyan entity permitted by the NOC to export crude oil.