Libyan operational and political challenges vie for attention

The Libyan Presidential election is set to take place in just over a month. Libyan oil production of 1.6 mbd is targeted in 2022, more than a third higher than the current level. No matter the election's outcome, continued friction between the warring factions controlling the oil industry means higher production will likely remain elusive.

Khalifa Haftar, leader of the Libyan National Army (LNA), and Moammar Gadhafi’s son Seif al-Islam Gadhafi have both joined the race for the Libyan presidency, with elections fast approaching on December 24. Both are divisive characters, bringing polarizing views to the political race, and look likely to battle for the presidency with current Prime Minister Abdul Hamid Dbeibah.

No one candidate has unified support across the fractured country. Other candidates are expected to enter the fray, with parliament speaker Agila Saleh and former Interior Minister Fathi Bashaga potentially announcing their candidacy along with Prime Minister Abdul Hamid Dbeibah.

Khalifa Haftar’s confirmation was widely expected after he delegated his military duties to his chief of staff back in September, three months ahead of the election, so that he could meet candidacy terms. In contrast, Abdul Hamid Dbeibah committed not to run for president when he became prime minister in February. However, given his popularity, he is now expected to join the race, although he did not leave office three months ahead of voting as Haftar did. As for the prospects of Seif al-Islam Gadhafi, it seems a stretch that a candidate who has been in hiding in recent years could win; after all, he is wanted by the International Criminal Court on charges of crimes against humanity.

The fear of returning to a tyrannous dictatorship will likely keep Gadhafi out of power, while Libya’s East-West divide means no candidate appeases both sides. Haftar may have support in eastern Libya, but predominantly Islamist western Libya will push back against such leadership, especially in Tripoli. In fact, they already are.

Politicians and militia leaders who oppose Haftar and Gadhafi are trying to amend electoral laws to rule the two out of running. Polling stations in western Libya are already being closed by those opposing Haftar, so voting ballots are not available. Meanwhile, hundreds of protesters gathered over the weekend in Tripoli and Misrata to rally against the candidacy of Gadhafi and Haftar. Outside of western Libya, Haftar has control of eastern and southern Libya and international support from Egypt, UAE, Russia, and France.

While Libyan crude exports have been relatively steady this year, they belie underlying volatility. Unrest late last month resulted in damage at the 120 kbd Zawiya refinery. The refinery is connected to the El Sharara oil field, Libya’s largest, and damage to storage tanks at the refinery temporarily impacted exports. Sporadic episodes of sabotage continue to cause minor disruptions. Last week’s episode came courtesy of the direct drilling of a pipeline in the Al-Wadi field – both for crude extraction and the removal of the pipe for sale in the scrap market.

Libyan crude exports are holding at 1 mbd in November, down 100 kbd on both last month and versus the average over the first ten months of the year. The drop is from the port of Es Sider, which suffered a pipeline leak and subsequent closure for ten days late October and into November. This drop will be reflected in Libyan oil production in next month’s OPEC report. November’s report showed OPEC secondary sources pegging production at 1.16 mbd in October, just above the average of 1.15 mbd seen across the last two quarters. Europe accounts for the vast majority of Libyan crude exports, with Italy the leading destination. This month is no different, although flows bound for Spain are currently at a 5-month high.

While Libyan production, and therefore exports, will continue to be influenced by unforeseen events, politics will command the most attention in December. While political factions within the country could threaten the electoral vote, there is such a willingness for an election from the international community – including the United Nations – that it seems a resolution will be reached, as long as a consensus on electoral rules is achieved before the actual election. What is less certain is who will win and how many rounds of voting it will take. But if Prime Minister Abdul Hamid Dbeibah does throw his hat in the ring as expected, he will provide stiff competition to Haftar.  

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