Gadhafi Forces Boot Libyan Rebels From Oil Business

The longer the conflict in Libya drags on, the more important oil becomes. The U.S. and Europe are squeezing Moammar Gadhafi by preventing him from selling oil, and at the same time, they've given the rebels the green light to export oil from their territory. But, as NPR's Martin Kaste reports from Libya, the rebels aren't getting the boost from oil they'd hoped for.

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This is WEEKEND EDITION from NPR News. I'm Liane Hansen.

The longer the conflict in Libya drags on, the more important oil becomes. The U.S. and Europe are squeezing Moammar Gadhafi by preventing him from selling oil. At the same time, they've given the rebels the green light to export oil from their territory.

But as NPR's Martin Kaste reports from Libya, the oil isn't giving the rebels the boost they'd hoped for.

MARTIN KASTE: It's a gorgeous Mediterranean morning in Tobruk, in eastern Libya. But Anwar Hassan is yawning.

Mr. ANWAR HASSAN (Volunteer Guard): I stayed up late last night guarding the area, all night long.

KASTE: Hassan and other volunteers take turns watching the refinery and oil tanks perched on a hill overlooking the port. The refinery is up by a cemetery for the German soldiers killed here in World War II. In the current conflict, Tobruk has been spared serious battles but Hassan says there's a constant threat from Gadhafi's fifth column.

Mr. HASSAN: We expect anything from this crazy man. That's why we stay up late and, you know, watch things and try to protect ourselves.

KASTE: Last month, rebels say Gadhafi forces sabotaged the two distant oil fields that supply this terminal. Mohammed Saleh works for an oil marketing company. He says the affected oil fields are called Misla and Sarir.

Mr. MOHAMMED SALEH: Misla is offline. Sarir is still working. But the power, there is no power. All the fuel comes to Tobruk just by gravity.

KASTE: By gravity?

Mr. SALEH: By gravity, yes.

KASTE: By gravity, because the booster system that usually pushes oil through the pipeline was also attacked. Now Tobruk is just getting the oil that was already inside the 300-mile long pipeline, as it slowly drains down toward the Mediterranean.

Since Tobruk is the rebels' only major oil terminal, the attacks have put them out of the oil-exporting business.

Mr. SALEH: We need the money to pay the wages for the people. We need the money to buy food. We need the money to make your facilities run, you know; for equipment, spare parts and for a lot of things, you know. And it's very important to have our oil runs.

KASTE: The oil already in Tobruk's storage tanks is needed here, to generate electricity and to run water desalination plants. It's enough to keep the lights on and the water flowing for a few months but after that, this region of rebel-held Libya may have to import oil. And it's already importing gasoline.

(Soundbite of squealing tires)

KASTE: Not something you'd guess from the car scene in Benghazi.

(Soundbite of squealing tires)

KASTE: Every evening, young men show up on the waterfront to burn rubber for kicks, apparently indifferent to the fact that the rebels don't control any refineries that make gasoline, and that they have to ship it in from other countries.

(Soundbite of squealing tires)

KASTE: Not that you can blame the kids for taking gas for granted. It's dirt cheap here, about 40 cents a gallon. It was subsidized under Gadhafi, and the rebels are spending their limited resources to keep the prices low. In fact, they recently cut the price at the pump by another 25 percent.

Mr. WALID BOUGAIGHIS: Whoever took the decision was wrong.

KASTE: Walid Bougaighis is an experienced oil executive in Benghazi. He says cutting the price of imported gas made no sense.

Mr. BOUGAIGHIS: Because in a time of war, you don't do this. I mean you should do even more, not in the sense of increasing prices, but of curtailing the supply to the local market. Okay, especially when you talk about gasoline.

KASTE: Bougaighis was briefly put in charge of the part of Libya's national oil company that fell into rebel hands, but he was later forced out. He says it's hard to know who ordered the lower prices for gasoline or why, and he doesn't want to discuss the rebellion's internal politics.

He is optimistic about the revolutionary movement's chances to get back into the oil exporting business, especially if the rebels captures the bigger oil facilities in the west. And he doesn't think Gadhafi will sabotage those.

Mr. BOUGAIGHIS: If he begins doing this all over Libya, that's a red line for him.

KASTE: Because it's...

Mr. BOUGAIGHIS: We are for certain countries an important supplier - in Europe.

KASTE: And he says the already-sabotaged oil fields will be relatively easy to restore once there's peace. The repairs should take weeks, he says, not months.

Martin Kaste, NPR News, Benghazi, Libya.

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