Oil A Major Prize In Fight For Control Of Libya Libyan rebels and forces loyal to leader Moammar Gadhafi have been in a vicious tug of war over the country's main oil ports. But even if one side in the conflict could hold on to the area near an oil terminal, that doesn't mean the oil would start flowing. There are security and technical challenges.
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Oil A Major Prize In Fight For Control Of Libya

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Oil A Major Prize In Fight For Control Of Libya

Oil A Major Prize In Fight For Control Of Libya

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MELISSA BLOCK, Host:

In the struggle for control of Libya, the country's lucrative oil industry is major prize. Fighting has been ferocious around key oil facilities on the Mediterranean coast. Libyan rebels could desperately use the petro dollars to buy weapons.

But as NPR's Jackie Northam reports, getting the product to market is not easy.

JACKIE NORTHAM: For weeks, the fighting between Libyan rebels and pro-Gadhafi forces has seesawed along a major highway that hugs the Mediterranean coast. One day the rebels capture a strategic city. The next day, Gadhafi's forces take it back.

It's a vicious fight for control. But then this stretch of coastline is prime real estate, because it contains Libya's main oil ports of Ras Lanuf and Sidra, says Greg Priddy, analyst of global energy and natural resources at Eurasia Group.

GREG PRIDDY: Roughly half of Libya's total exports came out of two ports located near Ras Lanuf. Those two combined were 650,000 barrels a day out of exports that were about 1.3 million barrels a day. So that's why the fighting over the Ras Lanuf area has been so strategically significant.

NORTHAM: And at about $100 a barrel, that's a lot of money. But even if one side could hold on to the area near an oil terminal, that doesn't mean the oil would start flowing. There are security and technical challenges.

Jim Burkhard, the managing director for global oil at IHS Cambridge Energy Research Associates, says there's also the legal question.

JIM BURKHARD: The global oil industry is still, there's still a great deal of concern and uncertainty about the legal framework around Libyan exports. When you have a country that's in civil war and it's not clear who is in charge, who gets the revenue, who has the legal right to sell the oil, yes, it gets to be a little murky.

NORTHAM: The U.N. sanctions on Libya don't prevent rebels from selling oil. But given the legal tangle, Burkhard says many oil companies are skittish about getting involved at the moment.

The Persian Gulf state of Qatar has offered to help the rebels by marketing their oil in return for food, money, medicine and the like. Burkhard says that might help attract others to do the same.

BURKHARD: I think most people would see it as a sign of support and perhaps as being a way to build up momentum to have more countries recognize the rebels as the legitimate government of Libya. And if so, that could then lead to a more sustained and higher level of Libyan exports.

NORTHAM: Earlier today, a massive oil tanker pulled out of a port near the eastern city of Tobruk, which is firmly under rebel control. The tanker is believed to be carrying a million barrels of oil.

MICHELLE WIESE BOCKMANN: This is the first shipment we know of that's being sold by the rebel-controlled oil company.

NORTHAM: Michelle Wiese Bockmann is the markets editor at Lloyd's List, a global daily shipping newspaper in London, which has been tracking the tanker which just left Libya. She says what's known is who owns the tanker and who chartered it. Bockmann says it's not clear if Qatar is involved, or where the tanker will end up.

WIESE BOCKMANN: Shipping is not a very transparent industry. I mean, this is a very sensitive commercial shipment and it's more commercially sensitive than most.

NORTHAM: But a million barrels of oil is just a drop in the bucket compared to Libya's pre-conflict output. And the rebel-held oil fields are small compared with those still under Gadhafi's control. Still, there is a concern that Gadhafi may launch small attacks on the eastern oil facilities as a way to prevent rebels from exporting.

The Eurasia Group's Priddy says, so far, neither side in the Libya conflict has launched a full-scale attack on the oil facilities.

PRIDDY: Nobody has gone in and tried to do a scorched earth policy where they would destroy things as they withdrew. They've been hit by stray fire but nobody has deliberately tried to completely destroy them.

NORTHAM: That could change if the war in Libya intensifies.

Jackie Northam, NPR News, Washington.

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