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Libyan oil, desert
This pristine desert oasis in Libya is far from the civil war raging havoc in the country, making it difficult to keep back attacks by ISIS or other factions against Libyan oil facilities. Photo: Pixabay.

ESAI: Libyan production will not recover

Intelligence Briefing

Libya is the latest front in the West’s campaign against the self‐proclaimed Islamic State (also known as ISIS or ISIL). The recent U.S. air strikes, press reports of the French aircraft carrier moving to waters off of Libya, and the quickly rumored and just as quickly knocked‐down discussion of Italian troops going to Libya has only highlighted the ongoing chaos in that north African country. The civil war is now almost two years old, and the broader political chaos that resulted from Colonel Muammar Gaddafi’s overthrow in 2011 has escalated with no end in sight.

Unfortunately for those looking for stability anytime soon, the average civil war lasts twelve years. The broader political problems of legitimacy in the Arab world coupled with the rise of cross‐state political movements such as ISIS could cause any resolution to the Libyan political situation to stretch to the outer limits of the average range for the end to the civil war. This means that the Libyan government, regardless of which one, will remain highly limited in keeping back attacks by ISIS or other factions against Libyan oil facilities.

The United States and European countries are interested in restoring stability to Libya and helping to create a functioning government. However, this is likely to be a long‐term endeavor that is only partially amenable to outside political or military support. While there was, for a short while over the past two weeks, rumors that Italy might deploy a significant ground force into Libya, Prime Minister Renzi quashed that rumor and said that Italy would only deploy forces if and when there was a unitary government which asked for assistance. This means, for Rome at least, that military assistance would follow and support a political reconciliation between the two main claimants to the mantle of legitimacy in Libya.

While there are ongoing negotiations, or attempts at negotiations pushed by Washington and key European states, so far it does not look at all hopeful. In the meanwhile, the efforts of the West are focused on two issues. First is conducting strikes against ISIS leaders and key operatives who might be either planning on targeting Western targets or who might be consolidating control over parts of Libya. Second is keeping refugees from flowing into southern Europe (whether they are Libyans or Africans who are taking advantage of the lack of governance in Libya to launch from its shores).

News reports indicate that the United States, France, the United Kingdom and Italy all have Special Forces on the ground in Libya largely to support intelligence gathering and targeting ISIS cells or leaders. The recent U.S. airstrikes two weeks ago against ISIS leaders and a training camp in Libya may or may not reflect this small ground presence, but the attacks indicate that Washington is focusing on elements of the terrorist group that might be planning attacks on Western targets. The news information on the French aircraft carrier also hints that any strikes that Paris may carry out will be against those potentially plotting against French targets. All of this is to say that the level of effort and the focus of Western states in Libya, at least as regards ISIS, are on strict counterterrorism as opposed to creating conditions in which competing claimants to governing legitimacy can work out a compromise. In the meanwhile, the competing governing factions will have to defend themselves against not only other claimants to legitimacy but also ISIS and other smaller groups that have begun to attack Libyan oil production and export facilitates with increasing regularity.

The recent attack in neighboring Tunisia also points to the problem of ISIS presence in Libya not only helping to continue the instability and political stalemate there but also spreading unrest further in Northern Africa.

About Sarah Emerson: Sarah Emerson joined ESAI when the petroleum consulting practice was launched in 1986. She is currently President of ESAI and a principal in ESAI Energy, LLC, which conducts research and consulting on global petroleum and liquid fuels markets.

As Managing Principal of ESAI’s Petroleum and Alternative Fuels practice, Ms. Emerson has developed many of ESAI’s unique analytical tools for assessing the oil market and forecasting oil prices. In addition, she has supervised the development of an empirical source database of monthly oil data that cover the period January 1978 to present for every country in the world with particular focus on non-OECD countries. More broadly, she has conducted several industry studies on a diverse range of topics, such as the transfer of pollution in energy trade, the profitability of Asian refining, the future of the Asian bitumen market, petroleum product markets in the Indian Ocean, Strategic Petroleum Reserves, the outlook for global automotive fuel markets, GHG Emissions from gasoline and diesel production, and the future of the Russian refining industry. In 1992, she published the first description ever available in the West of the Russian refining sector.

Ms. Emerson is an expert witness in energy sector litigation, an adviser to the U.S. and Japanese governments on energy security issues, and a reader/commenter for the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report. She has testified before the Senate Energy Committee and regularly publishes articles in the energy trade press.

Ms. Emerson is a member of the Cornell University Council. She was a 2004 Key Women in Energy Honoree. In 2004 and 2005, she was the Repsol-YPF Senior Fellow at the Center of Business and Government at Harvard University where she conducted research on the oil markets and energy policy. She received her B.A. from Cornell University and her M.A. from the Johns Hopkins University Nitze School of Advanced International Studies.

About ESAI Energy LLC: Energy Security Analysis, Inc. (ESAI), founded in 1984, is a global energy consulting company that provides market research and strategic advisory services. ESAI Energy LLC provides outlooks ranging from 1-week to 25-years and a proprietary framework for interpreting and prioritizing empirical market data and industry information. ESAI Energy’s detailed analysis of energy markets identify and explain future market trends and opportunities for energy and energy dependent companies.

Published with permission by ESAI. No parts of this publication may be duplicated, transmitted or stored without ESAI Energy’s written permission. The estimates, forecasts and analyses in this report are our judgment and are subject to change without notice. No warranty is made or implied.

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