Islamic State targeting Libyan oil to make trouble, not a profit
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| Istanbul, Turkey
When the Islamic State first set聽its聽eyes聽on聽Libya, it no doubt saw fertile soil for conquest in a lawless land being聽fought over by myriad聽political and military factions.
The security vacuum left by the collapse of Muammar Qaddafi鈥檚 regime in 2011 made Libya a jihadist destination of choice after Syria and Iraq. And its position as a gateway to Europe and Africa, along with聽the presence of vast oil and gas reserves, only increased the attraction.聽
Now a string of recent IS attacks on oil regions and聽facilities have stirred concerns that IS, which has profited greatly from the sale of Syrian and Iraqi oil, assets which have been targeted by US-led airstrikes, could be seeking to replace that revenue with Libyan reserves.聽
Abul-Mughira al-Qahtani, identified by IS late last summer as the leader of its Libya branch, stressed in an August interview聽the strategic importance of controlling this 鈥渨ell of resources that cannot dry,鈥 using them to the benefit of Muslims worldwide and to the detriment of non-believers.
鈥淭he control of the Islamic State over this region will lead to economic breakdowns, especially for Italy and the rest of the European states,鈥 he told the聽IS propaganda magazine Dabiq.
In the near term, however, the greatest threat is to聽the welfare of聽Libya鈥檚聽citizens and to the financial viability of a future Tripoli-based government due to take power under a UN-brokered deal. And the goal of IS, which reportedly has some 3,000 fighters in Libya, seems to be to disrupt oil exports, rather than take control of oilfields.聽
In recent days, IS militants attacked Libya鈥檚 largest crude oil terminal in terms of loading capacity, Sidra, sparking massive fires that destroyed at least five tankers and burned until late Saturday.聽A suicide bomber also hit a checkpoint on Jan. 7 at the entrance of Ras Lanuf, home to a massive refinery.
The two聽oil terminals sit 18 miles apart in聽Libya鈥檚聽鈥渙il crescent region.鈥 IS didn鈥檛 claim the Ras Lanuf attack but said it was behind a truck bombing hours earlier, which hit a police training center in Zliten and killed 50 people, the deadliest single attack since 2011. The group has been聽making a push east from its stronghold in the coastal city of Sirte.聽
Situation unlike Syria or Iraq
Several days of clashes between IS militants and the Petroleum Facilities Guard resulted in dozens of casualties and the burning down of two additional tankers in Ras Lanuf, according to local media. An official of the National Oil Corporation told Reuters Monday that the oil stored in Ras Lanuf was taken to a safer location.
According to analysts,聽the IS goal for now聽is to disrupt the potential revenue streams of the state versus directly exploiting or exporting these resources.
鈥淚S in Libya seems more interested in destroying oil installations or at least stopping the production rather than, as in Syria, controlling the fields and selling the oil,鈥 says Mattia Toaldo, policy fellow at the European Council on Foreign Relations.
鈥淏ear in mind that oil income now goes into the coffers of the Central Bank, which in turn pays all salaries, including those of the militias which could potentially compete with IS,鈥 adds Mr. Toaldo.
He points out that the vast size and geography of Libya makes it more costly to transport oil by trucks. IS would also face tough competition from rival smugglers of petrol and other refined products, a longstanding tradition in a country that borders Tunisia, Algeria, Niger, Chad, Sudan, and Egypt.
In a December 2015 report, the International Crisis Group (ICG) warned that 鈥渢he dysfunctional security system for oil and gas infrastructure presents a tempting target for IS militants.鈥 Between February and March聽last year, IS militants attacked the Mabruk, Ghani, and Dahra oil fields in the central Sirte basin, killing many of the guards and kidnapping foreign oil workers.
In October, they took aim at the Sidra port, which used to receive 200 ships per year and had a loading volume of 447,00聽barrels per day聽in January 2011, according to the Libya Oil Almanac.
Too hard for IS to market Libyan oil
ICG鈥檚 senior Libya analyst, Claudia Gazzini, says the rationale of such attacks is to stop 鈥渁postate states from getting money from oil sales鈥 as well as weakening the state. But it is 鈥渉ighly improbable鈥 that IS will reach a stage whereby it can export refined fuels 鈥 even if it were to capture and control the oil terminals.
鈥淚 just don鈥檛 see that shipping line opening up without the international community being able to very easily target and stop those tankers,鈥 she says.
Also unlikely, she adds, is the prospect that IS would become a refiner and distributor of fuel in Libya's domestic market. This is because Libya's few operational refineries are complex, large-scale facilities that are difficult to run, compared to the smaller refineries found in Iraq and Syria. Another factor is subsidies that would make it hard to compete with Libya's state-supplied fuel, provided its government is still solvent.聽
Last week鈥檚 attacks聽have聽further dented Libya's economic standing. The Economist Intelligence Unit forecasts that its economy would shrink by 8 percent in 2016, the worst outlook in the world.
鈥淵ou can repair tanks, but you need a certain level of security to have foreign engineers come in, repair tanks and put Sidra online again,鈥澛爏ays聽Gazzini. 鈥淎fter these attacks, that is probably not going to happen for another year, so the possibility of an economic collapse has become even more serious now.鈥
Risk is high for oil companies
Many hope that the UN-brokered unity government, which received the backing of some representatives from rival administrations in the east and west, will help the country change course. The stakes are high for Europe, which fears both an ascendant IS in Libya and the flow of migrants using it as a launching pad to cross the Mediterranean.
The European Union has pledged $108 million to help Libya fight IS, as soon as the unity government comes to power. Still, given the future government's聽broad array of opponents, many are pessimistic, including oil companies, which have either halted or scaled back their operations in Libya.
鈥淐ontrolling the oil is both a short and long-term goal of IS,鈥 says Keith Lamb, a security consultant worked in Libya until 2014 and now heads Lamb鈥檚 Security Solutions.
鈥淏y controlling the ports, oil fields as well as the pipelines, you pretty much control the money any government could make from the sale of oil,鈥澛爃e says.聽鈥淚t also prevents outside investors from coming into the country. The majority of oil companies are not willing to take the risk of getting back into Libya right now.鈥