Last updated: 3 April, 2014

Libya rebels make progress in talks on reopening oil ports

Rebels demanding autonomy for eastern Libya said Thursday they had made progress in talks with the central government on reopening key oil ports they closed to exports last July.

A rebel spokesman said a first port might reopen as early as next week, raising hopes of an end to a nine-month blockade Tripoli says has cost the country more than $14 billion in lost oil revenues.

The prospect of a return of Libyan oil to the market, after the blockade slashed exports from 1.5 million barrels a day to just 250,000, prompted a sharp dip in world prices on Thursday before a rally later.

Wednesday’s meeting in the rebel-held port of Brega came two weeks after US Navy SEALs seized a tanker loaded with rebel oil in international waters in the Mediterranean, effectively ending their hopes of exporting crude in defiance of the central government.

The Tripoli authorities on Monday released three rebels who had been detained on the tanker in a bid to advance the negotiations.

“We met yesterday (Wednesday) with a government delegation headed by interim finance minister Marajaa Ghaith and we reached agreement on several points,” said rebel spokesman Ali al-Hassi.

“The government gave a positive reception to the issues that we raised,” he said, adding that the first of the five main export terminals held by the rebels could be reopened early next week.

The Tripoli authorities denied that there had been any direct talks with the rebels, insisting in a statement late on Thursday that the negotiations had been conducted through intermediaries from the region’s powerful tribes.

Neither side gave any details of the agreement under discussion.

But a source close to the negotiations said the rebels were demanding a referendum on restoring the autonomy that the eastern Cyrenaica region enjoyed for the first 12 years after Libyan independence in 1951.

They were also demanding full back pay for their men, who were employed as security guards at the oil terminals before launching their blockade.

The eastern oil terminals were a key battleground in the NATO-backed uprising that toppled and killed veteran dictator Moamer Kadhafi in 2011, changing hands several times before the rebels finally captured them.

The source said that the talks were “serious” and that, if they bore fruit, it was proposed that the Zueitina export terminal be the first to reopen.

– ‘Crisis they created’ –

The head of the rebels’ self-declared regional government Ibrahim Jodhran said he had decided to seek a solution “through dialogue to cut short foreign intervention”.

A Western diplomat in Tripoli said the rebels were “trying to find a way out of the crisis they created” with last month’s abortive oil export attempt which prompted the intervention of the US Navy and a March 19 UN Security Council resolution outlawing all unauthorised Libyan oil exports.

The Tripoli government’s failure to stop the Morning Glory plunged Libya into one of its biggest crises since Kadhafi’s overthrow.

The ship’s escape after authorities had repeatedly vowed to take all measures to stop it underscored the weakness of the central government, which has struggled to rein in heavily armed former rebels.

The then prime minister Ali Zeidan fled to Germany as he was forced from office by a vote of no confidence in parliament.

The Tripoli authorities had threatened to launch an armed assault on the rebel-held oil ports using loyalist militias to supplement the weak regular army.

But a two-week ultimatum issued on March 12 was quietly dropped in favour of the search for a compromise.

Market analysts said rising expectations of an end to the blockade had had a major dampening effect on world prices before a rebound later in the day

Brent North Sea crude for May shed $1.16 to $104.46 a barrel at midday in London before climbing $1.03 to stand at $105.82 a barrel in late afternoon deals.

“The expectation of a growing oil supply from Libya (is) continuing to weigh,” noted Commerzbank analyst Carsten Fritsch.

Gary Hornby of British energy consultancy Inenco said: “A deal could be struck within the next 2 to 3 days, which could see Libyan oil exports boosted by approximately 600,000 bpd, quadrupling current export levels.”