Libya Losing $130 Million Per Day From Oil Protests

Libya’s prime minister Ali Zeidan has promised to act “in a timely manner” to break up protests at several large export terminals and oil fields across the country, after he claimed on Wednesday that the strikes had been costing nearly $130 million a day in lost oil revenue over the past month.

“I won’t let anyone hold Libya and its resources hostage to these groups for long,” the prime minister said, following the announcement of arrest warrants for the leaders of the oil strike.

Libya’s prime minister Ali Zeidan has promised to act “in a timely manner” to break up protests at several large export terminals and oil fields across the country, after he claimed on Wednesday that the strikes had been costing nearly $130 million a day in lost oil revenue over the past month.

“I won’t let anyone hold Libya and its resources hostage to these groups for long,” the prime minister said, following the announcement of arrest warrants for the leaders of the oil strike.

[quote]”I am not threatening, but…these people must calculate what they are doing, so when action takes place everyone will understand why but I hope we won’t be forced to do something that we don’t want,” Zeidan further said, according to Reuters.[/quote]

The New York Times reported on Thursday that the protests and strikes had slowed Libya’s daily oil production to just a-tenth of its regular capacity in recent days, as workers demanded improved working conditions and terms promised during the early post-Gaddafi era.

NYT also noted that the protests began in Libya’s eastern region, where the rebellion against the Gaddafi regime had been the strongest, before moving to the west of the country.

As the western protests have grown, local utilities have been forced to cut back power generation, which has caused blackouts. The western protests are backed by the heavily armed Zintan militia, which is based in a western mountain town and has long flexed its muscles to gain influence over the government and nascent security forces.

“The Zintans are bargaining for higher allowances and a bigger role in guarding the oil installations,” one oil executive told Reuters.

[quote]“Libya is grinding to a halt. As with most of the Arab Spring countries, the optimism was short-lived,” added Badr J. Jafar, president of Crescent Petroleum, an oil and gas company based in the United Arab Emirates that has had conversations with the Libyan government over investing there, to NYT.[/quote]

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Oil accounts for 95 percent of Libya’s export earnings and 75 percent of government revenues. Zeidan said last month that he would use military force, if necessary, to break up the protests.

“If the blockade of the oil terminals continues, the state will be obliged to use all means at its disposal, including those of the army,” he said on August 16, as cited by Platts

But David L. Goldwyn, the State Department coordinator for international energy affairs in the first Obama administration, warned that any action taken against the protestors could prove difficult for the Libyan prime minister.

[quote]“The challenge for Zeidan is that it will be difficult to muster the force that will be necessary to make these arrests when some of the militias he would rely on are allied with the strikers,” Goldwyn said to NYT.[/quote]

According to Reuters, Libya’s Finance Minister Alkilani Abdelkarim al-Jazi told reporters on Wednesday that a prolonged crisis could force to draw on its foreign reserves but he did not foresee any problems in meeting financial obligations, including salaries, at least until the end of the year.