Former rebels who fought the Libyan dictator Col. Muammar el-Qaddafi and are now challenging Libya’s shaky central government have announced the creation of their own oil company to sell crude from oil fields and port terminals they currently occupy.
For the past three months, most of Libya’s oil production and exports have been halted by loosely aligned militias in the eastern region of the country that are pushing for autonomy. They have made Prime Minister Ali Zeidan’s government, which has repeatedly threatened to arrest the occupiers, look increasingly impotent, which emboldened eastern political leaders, including some former rebels, to form an autonomous regional government last month.
The establishment of a regional oil company was largely seen as a symbolic move since few oil shipping companies would rush to challenge Tripoli authorities and Western governments that want to see a central government succeed. But the company represents another escalation of tensions over the country’s most strategic economic asset.
"It’s just another sign that the political process of forming a national government is in deep disarray," said David L. Goldwyn, the State Department coordinator for international energy affairs from 2009 to 2011.
Mr. Zeidan, who was briefly kidnapped by a militia group last month, spoke of the oil blockades in stark terms at a news conference on Sunday. “We have given these groups a week to 10 days after which the government will exercise its functions,” he said. “We will act appropriately.”
Libya’s economy is largely dependent on the oil industry, which is dominated by the national oil company working in partnership with several major international ones. Last year, more than 90 percent of the government’s revenues and the country’s export revenues came from oil and gas.
Under normal circumstances, Libya supplies about 1.5 million barrels a day, or roughly 2 percent of global market needs. But in recent months, it has produced less than 300,000 barrels a day.
Southern Europe is most dependent on Libyan oil and gas exports, and that dependency became more tenuous on Monday when protesters shut down a gas export pipeline while demanding more rights for the Berber minority that lives mostly in the southern desert.
The formation of a regional oil company independent of the Libya’s national oil company was particularly provocative coming less than a week after the central government issued a statement threatening that the country’s air force and navy would use “force, arrest and detention” against anyone who tried to buy oil from the militia guards. The self-created regional government, known as the Cyrenaica Political Bureau, is intended to recreate the system maintained by King Idris in the 1950s when Libya was divided into three semiautonomous states. The oil-rich east, the base for the insurrection against the Qaddafi government, has long complained of being exploited for its mineral wealth by the western political elite in Tripoli.
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