Libyan rebels continue efforts to exempt oil sales from sanctions

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Apr. 1 -- Forces opposed to the rule of Libya’s leader Moammar Gadhafi, reversing earlier statements about their need for funding, said they are discussing plans with United Nations officials to exempt exportable oil now under their control from international sanctions.

“Our demands are simple and clear. Our top priority is lifting the sanctions that stop us exporting our oil,” said Ali Tarhouni, the rebel official in charge of economic, financial, and oil affairs.

“What we want is an exemption from the sanctions. This is our main problem. It is very hard for us, it is an obstacle,” said Tarhouni, who added he had raised the matter with visiting UN envoy Abdelilah Al-Khatib.

Qatar recognized the Libyan rebels movement on Mar. 28, a day after Tarhouni said the Gulf Arab state had agreed to market oil produced from eastern Libya fields no longer under the control of Gadhafi.

“The Qataris agreed they would market crude oil for us, and we would put the money in an escrow account,” said Tarhouni. “We will receive what we need in fuel, medicine, food and humanitarian needs from them.”

UK Foreign Sec. William Hague said Qatar had offered to "facilitate" oil sales that are consistent with international law, but he provided no details about how the process would work, or how Qatar's offer has been received by diplomats.

Qatar Petroleum earlier declined comment on the reports of an agreement with the rebels, and the government of Qatar has so far issued no official confirmation of the alleged agreement.

Tarhouni said last week the lack of export revenues was not an immediate cause of concern as other sources of money were said to be available (OGJ Online, Mar. 24, 2011).

Meanwhile, Tarhouni said the rebels have established a “quasi-ministry of oil” and that staff are now working under that body or for the Arabian Gulf Oil Co., which claims to have cut ties with its parent, state-owned National Oil Corp.

AGOC officials say production is running at about 100,000 b/d, down 75% from the 400,000 b/d the company normally produces.

“We are talking about oil production in the southeast. The oil that flows from there is stored in liberated areas,” said Tarhouni, adding that the oil would be exported from Tobruk. “The only delay is finding vessels that will carry the oil,” he said.

The rebels earlier controlled all the oil export terminals in the east but were forced out this week, leaving Gaddafi’s forces in control of Ras Lanuf and Es Sider. Brega is now on the frontline, leaving the rebels in control of Zueitina and Tobruk.

According to diplomats, the UN sanctions on Libya will not prevent rebels from exporting Libyan oil as long as they circumvent firms linked to Gadhafi.

“There is no UN embargo on Libyan oil,” said one UN diplomat, who added, "The rebels can sell oil. But they can't do it through [NOC]."

Other diplomats said that no special permission would be needed from the Security Council's Libya sanctions committee, which oversees compliance with the sanctions, for the rebels to sell oil.

"As long as a company's not on the list, it's not sanctioned, and it can do business," said another UN diplomat.

UN Security Council resolutions 1970 and 1973 imposed sanctions on Gadhafi, his family and supporters, as well as NOC and its subsidiaries, including AGOC.

Following the rebels' initial claims of an agreement to sell oil, the Libyan government warned that it would sue any international company that concluded oil contracts with the rebels.

“The Libyan state will sue any party that seals deals regarding Libyan oil with parties other than [NOC],” the government said in a communique carried by the state news agency Jana.

“[NOC]…is the entity authorized by law to deal with external parties,” the government said. “Because of the strategic importance of these goods—oil and gas—at the global level, no country can leave their management to armed gangs.”

Contact Eric Watkins at

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