The eastern, internationally unrecognized Libyan government has decided to shut down oil fields in response to “attacks on the leadership and staff of the Central Bank of Libya,” stated Prime Minister Osama Hammad. “Force majeure” has been declared for all oil fields, terminals, and facilities in the region, according to a statement from the eastern authorities on Facebook on Monday.
Although the eastern government based in Benghazi lacks international legitimacy, most of Libya’s oil fields are controlled by the eastern military leader Khalifa Haftar. The Benghazi-based government did not specify how long the oil fields might remain closed.
Abdul Hamid Dbeibah, the Prime Minister of the internationally recognized Government of National Unity (GNU) based in the capital, Tripoli, has criticized the closure of the oil fields and insisted that they should not be shut down “under flimsy pretenses.” The National Oil Corporation (NOC) has not confirmed whether production has been halted, but one of its subsidiaries, Waha Oil Company, announced plans to gradually reduce production while another subsidiary, Sirte Oil Company, also expects to lower output.
Two engineers from Messla and Abu Attifel informed Reuters on Monday under anonymity that production is continuing, and no orders have been given to stop operations.
The announced shutdown of the oil fields comes amid an ongoing conflict between the eastern government and the UN-recognized government in Tripoli, which has been scrambling for control of the central bank for several days—a dispute threatening to undermine a UN-mediated agreement. This latest conflict between the two administrations arose after attempts to replace the Governor of the Central Bank of Libya (CBL), Sadiq al-Kabir, with armed factions from each side.
Critics have accused al-Kabir of mismanaging oil revenues. The Presidential Council of Tripoli’s government appointed Mohamed Alshukri as the new governor of the central bank last week, a decision that CBL rejected. Alshukri ultimately announced that he would not assume the position and declined to be the reason for “any bloodshed between Libyans.”
The conflict escalated on Monday after a delegation from the Tripoli government attempted to take over the CBL leader’s office. Hammad condemned the attempt to replace the CBL head, stating that he would “take all legal steps” against the raid on the bank and the “kidnapping of several of its employees,” according to local media reports.
The closure of the oil fields could lead to a reduction in Libyan oil exports, potentially pushing Brent crude prices up into the mid-$80 range per barrel, according to an analyst from Citigroup. Brent oil prices crossed the $80 mark on Monday after dropping as low as $75 per barrel the previous week.
The central bank has long maintained its independence from the rival governments and serves as the only internationally recognized custodian of Libyan oil revenues, which is a vital income source for a country that has been marked by decades of conflict. Libya continues to be plagued by conflicts and civil war more than a decade after the NATO-backed ousting of longstanding leader Muammar Gaddafi in 2011.