Libya and Oil: Common Sense Prevails

By Sir Vincent Fean, The Ambassador Partnership LLP. Any opinions expressed are those of the author, and do not necessarily reflect the views of Libya Business News.

Sir Vincent Fean’s 39 years of diplomatic experience include serving as Consul-General in Jerusalem, Ambassador to Libya (2006-10), and High Commissioner to Malta.  An Arabist, he has engaged in senior policy-making, government affairs and negotiation in Whitehall, the Middle East and Western Europe.  He now chairs the Libyan British Business Council (www.lbbc.org.uk), with 87 member companies, building business bridges with Libya.

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Libya has long been a country of contradictions. In Qadhafi’s time, a poster promoting tourism promised “Everything you can imagine, and everything you can’t imagine”. Today, there is no tourism. Only street-wise or well protected expatriates elect to work there. But while Libya’s post-Qadhafi growing pains are not over, three facts are seldom mentioned:

  • Libya has no external debt;
  • has the second largest oil reserves in Africa (after Nigeria) and the ninth largest in the world,
  • and its competent National Oil Corporation (NOC) has proved it can raise production to 1 million barrels a day, with the prospect of increasing production to 1.5 mbd in the next couple of years.

While a lasting political settlement reuniting the country remains elusive, the economic potential is real. The NOC has gone through a tough time, but is coming out of it stronger.

The Libyan National Oil Corporation

In May I spent three days with the most respected man in Libya: Mustafa Sanalla, Chairman of Libya’s NOC.  We were in Aberdeen, the heart of Britain’s Oil and Gas industry, on a trade promotion visit organised by the Libyan British Business Council (LBBC).  Oil and Gas U.K. and the LBBC brought together over 100 British business people to hear where the NOC wants to go, and what it needs to get there. Ian Taylor, Chairman of oil trader Vitol, confirmed from experience that the NOC is good to do business with – methodical, reliable, paying its way.  The LBBC is taking a trade mission to Tunis on 22-24 October to resume the British business dialogue with the NOC and other key Libyan companies in power supply, telecoms, health care, financial services etc.

Sanalla is popular partly because he is not a politician – he has no political aspirations – and  because he gets things done, and tells it how it is. Getting things done includes tripling oil production, admittedly from a low base; sustaining a collegiate corporate culture with 65,000 staff spanning the West, East and South of Libya, across political and warlord divides, and achieving NOC aims by rational persuasion and sheer persistence.  On 11 July he rose to a highly political challenge: to persuade the powerful Field Marshall Khalifa Haftar – the military leader of the East –  to return Libya’s key oil ports to his NOC control. This is essential to restore production to 1 mbd and more. Sanalla’s ace card is that unless oil is exported under his control, it isn’t exported at all. The international community will not permit it. Khalifa Haftar is definitely part of the solution for Libya; he has acted consistently in the national interest by evicting a blackmailing thug named Jadhran from the ports, and returning them to Sanalla. A victory for common sense, and a lifeline for the Libyan economy.

Sanalla’s truth telling includes highlighting that the system of petrol subsidies inherited from Qadhafi needs to go: fuel smuggling costs Libya over $750 million a year at a conservative estimate. The criminal gangs smuggling fuel by land and sea also smuggle people, and arms. Sanalla’s proposals for tackling criminality are eminently practical, and people can see that, but vested interests are ranged against them.

A political snapshot

The international community focus, rightly or wrongly,  is on encouraging national  elections as soon as feasible. President Macron brought some of Libya’s bickering political leaders together for a day in Paris in May, but without adequate preparation. Photo opportunities are no substitute for substantive agreement. The UN Security Council on 6 June endorsed a plan for elections this year, and called for all to “respect the results of these elections”.  Aye, there’s the rub. Who is going to make the losers accept defeat? There are no takers for that tricky task.

The canny UN Envoy to Libya, Lebanese ex Minister Ghassan Salame, has a better grasp of Libyan reality than his two  predecessors. He can persuade, but not coerce. He has generated dialogue through his National Conference – a rolling programme of meetings across the country. He listens well. His conclusions are that Libya needs

  • to become a more decentralised state (Qadhafi centralised power in his own / his family’s hands, and in Tripoli)
  • transparent, prioritised use of public money
  • unified state institutions (the NOC is exemplary)
  • appointments based on merit – no to nepotism
  • a unified, professional military and security apparatus, free from political interference
  • elections which reset the political dial in Libya, and do not re- divide the country.

Salame also has a keen appreciation of the challenges:

  • self-interested politicians clinging to office
  • corruption
  • criminals who profit from political stalemate through people trafficking etc
  • militias to be absorbed into legitimate security forces, or dispersed
  • cultural change, including subsidy reduction
  • human rights abuses, past and present
  • healing the wounds of tribal conflict
  • ISIS/Da’esh.

Britain is contributing to Libyan efforts to overcome these challenges, as Middle East Minister Alistair Burt said in Tripoli in April.  The recent appointment of Sir Henry Bellingham MP as the Prime Minister’s first ever Trade Envoy to Libya is good news, and augurs well for U.K./Libya trade as a high priority for our Government. Sir Henry is already on the case.

What Mr Burt did not say, for he is innately polite, is that President Trump – the Great Disruptor – has done one thing which favours the U.K. and two which favour Libya:

  • by banning all Libyans except the top brass from entering the US, he has presented a golden opportunity to British companies ( plus universities and trainers) to be Libya’s Anglophone partner of choice
  • by not prioritising Libya for the exercise of his steamroller foreign policy, he leaves space for the UK, EU and UN to help Libyans to come back together
  • by reneging on the US commitment to the Iran nuclear deal, he has increased significantly the value of Libya’s income stream – oil and gas.

The track record of Libya’s National Oil Corporation shows that common sense and the common interest can win through in this land of contradictions. We need more common sense at the political level. Sanalla and Haftar have shown the way.

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