Libya: IOCs, shippers under pressure from rebels, loyalists

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 14 -- International oil and shipping companies came under pressure from both sides in Libya’s developing civil war, with the government demanding their return to the country to resume work and rebels warning them against cooperating with Tripoli.

“We are looking for the international community to shoulder its responsibility and impose a no-fly zone, and restrictions on the ships so that no more weapons are used against civilians,” said Mustafa Abdel Jalil, head of Libya’s opposition National Council.

Any post-Gaddafi leadership would adjust Libya’s oil policies “according to the positions countries are taking towards Libya in these difficult times,” Jalil told the Financial Times in a warning that came on Mar. 13 as government forces pushed back rebel fighters in the country’s eastern region.

However, the government also issued demands of its own, announcing that the country’s oil terminals are safe and urging IOCs to resume their work in the country.

“Libyan oil terminals have become safe,” Libya’s state-owned National Oil Co. said over national television. “All employees are asked to return to their jobs in all oil facilities. And we urge [foreign] firms to send their tankers to load and unload.”

Refinery blaze

NOC’s statement followed a request by Libya's de facto oil minister Shukri Ghanem on Mar. 13, calling on Eni SPA for help in extinguishing a blaze at an eastern refinery retaken from rebel forces.

“There's quite a big fire in one of our…kerosene storage units (at Ras Lanouf), and we're trying to fight it," Ghanem told The Associated Press in a telephone interview. "We are asking for some help to try to put it down."

Ghanem said, "I spoke with Eni's chairman to see if they can help us because [the refinery] is on the Mediterranean and it affects the environment," he said, adding that he was told "they're deciding whether they can help."

Eni's offices in Milan and Rome were closed for the weekend on Mar. 13 and company spokesmen weren't answering their cell phones. There was no word on Mar. 14 whether Eni would consider the request by the oil minister.

Ghanem’s request came amid reports that the 3-week-old rebellion has closed or crippled major Libyan refineries, which are concentrated in the rebel-held east, and has forced the opposition to import an increasing amount of gasoline from refineries abroad.

The rebels have received help from the Persian Gulf, with one fuel tanker from Qatar docking in Benghazi last week, and promises of more from the UAE. Still, the rebel-held areas could soon be facing a lack of supplies altogether.

“A gasoline shortage is a very real possibility,” said senior manager at the state-owned Arabian Gulf Oil Co. complex in downtown Benghazi, now in rebel hands. "It's a big concern for us."

However, due to the imposition of sanctions against the Libyan government, it is unclear whether oil or shipping firms can engage in any further trade with the North African country for the foreseeable future.

“Between the uncertainty of applicable law including sanctions, war risk and simple want of business, shipping to Libya is essentially frozen, if not dead for the foreseeable future,” said one security adviser to European and US governments and companies.

“Owners and charterers will have to take care that oil is loaded only at ports known to no longer be under the control of the government and that money for such cargoes does not end up in the hands of those who are subject to the sanctions,” said a shipping official. “It's not an easy proposition.”

Libyan oil ban
Ghanem said talk of an international oil ban on Libya has not included imports of refined petroleum, and that many companies in the international market are willing to sell gasoline and diesel fuel to Libya.

“We are importing. We are exporting crude and importing product," he said, adding that, “The sanctions do not affect the gasoline.”

Still, another analyst noted that shipping firms must exercise caution regardless of who they may be dealing with.

“There is potential risk in dealing with any entity because the lines of authority are so haphazard that the certainty and transparency is not there,” the analyst said.

Underlining the pressure now being exerted on firms, he said: “It would be prudent for companies to be wary less their dealings come back to haunt them at some future period, either with members of the same council or some sort of other successor government, which may claim they were not properly paid or otherwise treated.”

Contact Eric Watkins at

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