US Embassy alarmed by power struggle at Libya's oil company

The US Embassy in Libya expressed concern Thursday over the struggle for control of Libya's oil corporation after its chairman was sacked by one of the country's two rival governments the day before.

The crisis throws into question Libya's oil revenues, which fund much of the public sector, and also future production amid an international fuel shortage.

The embassy tweeted that US officials are following the developments with “deep concern." It added that Libya's National Oil Corporation, or NOC, has preserved its political independence and worked effectively during the country's turmoil under Chairman Mustafa Sanalla. The statement indicated US backing for the sacked oil chief.

On Wednesday, the Tripoli-based government of Abdul Hamid Dbeibah announced Sanallah's dismissal and the appointment of Farhat Bengdara, a former governor of Libya’s central bank, to the post. Dbeibah also announced the appointment of a four-member commission to oversee the handover.

The announcement came as government offices were closed for the celebration of the major Muslim holiday of Eid al-Adha.

Sanallah has refused to leave office, arguing in a televised speech on Wednesday that Dbeibah’s government lacked legitimacy.

“The reported replacement of the NOC board may be contested in court but must not become the subject of armed confrontation,” said the US Embassy.

In a video circulated on social media, employees of the oil company were seen rallying at the entrance of the corporation's building in Tripoli — apparently to prevent members of the Dbeibah-appointed commission from stepping in. However later on, Dbeibah’s government announced that both the commission and the new oil chief had walked into the building and have taken their new posts.

The corporation issued a statement accusing a Dbeibah-allied armed group of breaking into the building and attacking workers before instating “by force” the new oil chief and his board.

The North African country has been wrecked by conflict since the 2011 NATO-backed uprising turned civil war toppled and later killed longtime dictator Moammar Gadhafi. For many years, Libya has been divided between two administrations, one in the east and another in the west, each backed by foreign governments and local militias.

Jalel Harchaoui, a Libya specialist and associate fellow at the Royal United Services Institute warned that the NOC shake-up might provoke violence between militias backing opposing sides.

“Dbeibah has used armed forces to install Bengdara and Sanallah has the sympathy of several armed groups in the greater Tripoli area,” he said.

The country’s prized light crude has long been a feature of Libya's conflict, with rival militias and foreign powers jostling for control of Africa's largest oil reserves. Last year, Libya was the seventh largest producer of oil in OPEC, despite regular closures to its oil and gas infrastructure due to unrest. Washington says Libya is estimated to have third of the African continent's oil reserves.

In its statement, the US Embassy also called on all parties to restore oil and gas production in order to address electricity shortages and urged for a “transparent” mechanism for management and oversight of oil revenues.

In recent months, Libya's tribal leaders have shut down crucial oil facilities, including the country’s largest oil field in the south. The blockage was likely meant to deprive Dbeibah’s government of funds and empower his rival, Fathi Bashagha, who was appointed as prime minister by the east-based parliament in February and endorsed by the east-based commander Khalifa Haftar.

The shutdown has exacerbated the country's electricity shortages and sparked protests, including one that resulted in the storming of the east-based parliament in Tobruk.

“We should work together to rebuild Libya’s oil production capabilities and make sure that the oil sector remains neutral to any political conflicts,” newly appointed Bengdara told a news conference in front of the Tripoli building Thursday. “Today, oil prices have reached 100 dollars per barrel. However, Libya’s production and exports remain far below its capabilities.”

Bengdara, 56, had served as the governor of the Central Bank of Libya for nearly five years under Gadhafi before defecting to the opposition in 2011. In recent years, he became know for his strong ties with the United Arab Emirates and Hifter, the self-styled military commander.

By appointing Bengdara, Dbeiba is attempting to have more control over oil revenues, appease the UAE and build a new rapport with his longtime adversary Hifter and hence weaken the position of his rival Bashagha, said Harchaoui, the Libya specialist.

“It's a way to kill multiple birds with one stone,” Harchaoui added.

In recent months, the United Nations has sponsored several rounds of talks between the country’s two rival legislative bodies to agree on a constitutional mechanism to hold elections — without results.