Why ISIS is Destroying Libya’s Oil

Geoff Porter
President, North Africa Risk Consulting

For the second time this month, massive clouds of black smoke from burning oil billowed above Libya. The first time, in early January, the Islamic State (ISIS) attacked two major oil storage facilities. Out of the seven tanks targeted, one collapsed entirely. Damage to the others rendered them unusable. Together, the two storage facilities accounted for 40 percent of Libya’s oil export capacity. A few weeks later, ISIS struck again, blowing up a pipeline that feeds one of the terminals.

It is clear that ISIS in Libya is trying to destroy Libya’s oil sector. To make matters worse, this was entirely foreseeable.

Libya is embroiled in a multi-front civil war, and control of the oil sector – the lifeblood of Libya’s economy – is central to controlling Libya itself. Libya’s two rival governments, in Tripoli in the west and Tobruk in the east, have both tried to wrest control of the sector for themselves. And it was inevitable that ISIS would try to do the same thing once it had grown large enough to do so. After all, illicit oil sales have been an important source of income for the Islamic State in Iraq and Syria, and ISIS in Libya would have liked to try to emulate that success. But the profile of Libya’s oil and gas sector is different from that in Iraq and Syria, and as a consequence, ISIS in Libya was never going be able to control the sector, and once it realized that, it would seek to destroy it.

Libya’s oil sector differs from that of Iraq and Syria in significant ways. First, unlike in Iraq and Syria, Libya has no teapot refineries. ISIS in Iraq and Syria has used mom-and-pop refineries to transform looted crude into refined products to sell to the retail market under its control. Without the ability to supply the retail market, ISIS in Libya would have to export crude. However, previous attempts by ISIS to illicitly export large volumes of crude were prevented. Furthermore, Libya does not have fleets upon fleets of tanker trucks to transport smaller volumes of crude to nearby markets. Iraq’s oil smuggling networks are decades old, dating back to the mid-1990s as a way to circumvent the UN’s Oil-for-Food Program. While Libya is riddled with smugglers, the infrastructure does not (yet) exist to transport crude to would-be buyers. Thus, unable to make money from it, ISIS has decided that no one else will either.

ISIS’ destruction of the oil sector achieves two things.

First, it deprives Libya’s two governments of the revenue that they use to pay militias that, if they were to stop fighting one another, could combat ISIS. Libya is in a surreal situation where both of Libya’s opposing governments draw their budgets from the Central Bank of Libya. The governments then pay the salaries of the different militias that ostensibly fight for them. Oil revenue is the Central Bank’s only meaningful source of revenue. If there is no oil, there is no revenue, and there are no salaries to buy the allegiance of militiamen who could fight ISIS.

Second, the destruction of Libya’s economic backbone reduces the likelihood that Libya’s third government, which is currently based in Tunisia, will be able to establish itself in Libya proper, and even if it is able to eventually come to Libya, that it will be able to succeed. The Government of National Accord (GNA), which emerged out of UN-led negotiations at the end of 2015, would be as dependent on oil revenue as Libya’s two current governments are. Without oil revenue, the GNA would have no money to pay the salaries of a future  Libyan National Army and public sector workers who constitute 80 percent of the workforce. Unable to pay for soldiers and social services, the GNA’s prospects would be bleak.

What destroying Libya’s oil sector does not do is actually strengthen ISIS or build its capacity. ISIS would still need to turn elsewhere for revenue and for materiel, meaning that it is still bound to ISIS in Iraq and Syria. This reduces the likelihood that ISIS in Iraq and Syria can create an independent self-sufficient “rear base” in Libya to which it can retreat if it is unable to hold on in Iraq and Syria.

In addition, ISIS’ destruction of the oil sector also has the potential to consolidate opposition in Libya against the group. ISIS has no shortage of enemies in Libya, but its opponents have not formed a united front against it. With ISIS threatening Libya’s natural and national patrimony, Libya’s opposing militias may see the wisdom of joining forces to combat it. With ISIS threatening to destroy the pie from which all of the militias benefit, they may opt to fight to preserve the pie’s very existence even if it means they might get smaller slices in the future. After all, a smaller slice is better than no slice at all.

The Author is Geoff Porter

Dr. Geoff D. Porter is the founder and president of North Africa Risk Consulting, a political and security risk consulting firm specializing in the extractive industries in North Africa. In addition, Dr. Porter is an assistant professor at the Combating Terrorism Center at the United States Military Academy at West Point.

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