Libya: Ports Unblocked, for Now
Ports under control of rebel forces have been reopened temporarily, unlocking export capacity of around 600,000 barrels per day. Rebels agreed to the deal after the government met some of their demands, which included relocating the headquarters of its Oil Protection Force to Brega.
So far, as of 7 April, two ports have been reopened: Zueitina and Hariga, while two other ports could be reopened in the coming weeks. With the reopening of two ports now we should see the unlocking of around 200,000 barrels of per day in export capacity. The agreement also tentatively includes government payment of compensation to the rebels, the dropping of criminal charges against them and the halting of the military offensive. For now, the reopening of two ports is being considered as a good will gesture on the part of the rebels.
But the deal also shows cracks in the rebel leadership-particularly among those senior leaders who disagreed with the good will gesture ahead of clear government action on the deal. OP Tactical intelligence reports that some higher-level rebel leaders are positioning themselves against main leader Ibrahim Jadhran, who led the negotiations with the government-some say unilaterally. There are growing divisions among the rebels and this could open the doors for a swifter government response in the area. However, re-opening the ports is a temporary move that does not signal an end to the crisis. The bottom line of this…
Libya: Ports Unblocked, for Now
Ports under control of rebel forces have been reopened temporarily, unlocking export capacity of around 600,000 barrels per day. Rebels agreed to the deal after the government met some of their demands, which included relocating the headquarters of its Oil Protection Force to Brega.
So far, as of 7 April, two ports have been reopened: Zueitina and Hariga, while two other ports could be reopened in the coming weeks. With the reopening of two ports now we should see the unlocking of around 200,000 barrels of per day in export capacity. The agreement also tentatively includes government payment of compensation to the rebels, the dropping of criminal charges against them and the halting of the military offensive. For now, the reopening of two ports is being considered as a good will gesture on the part of the rebels.
But the deal also shows cracks in the rebel leadership-particularly among those senior leaders who disagreed with the good will gesture ahead of clear government action on the deal. OP Tactical intelligence reports that some higher-level rebel leaders are positioning themselves against main leader Ibrahim Jadhran, who led the negotiations with the government-some say unilaterally. There are growing divisions among the rebels and this could open the doors for a swifter government response in the area. However, re-opening the ports is a temporary move that does not signal an end to the crisis. The bottom line of this crisis is that the rebels are seeking greater autonomy and a greater share in oil revenues-an issue that has not been addressed. While rebel divisions could make aggressive military action more effective, it will also make negotiations going forward more challenging. We could also see rival rebel groups as offshoots from the original senior leadership attempt to wrest control of the situation, making operations at ports highly uncertain.
In the meantime, Libya's government is still in a state of chaos following the resignation of prime minister Ali Zeidan. No consensus has yet emerged over the appointment of a new prime minister, whose position is now being filled temporarily by former defence minister Abdullah al-Thinni. On 30 March, parliament approved an election law, which will pave the way for elections later this year and which bans party lists, meaning that all candidates will be running as independents.
Lebanon: Slow Steps Towards Oil Auction
In Lebanon, where recent weeks have seen the installation of a new government that will be able to pass long-awaited oil decrees ahead of the country's first offshore oil and gas auction in the Levant Basin, additional steps have been taken last week. The Cabinet has made 10 key appointments and formed a ministerial committee to study the designation of Lebanon's offshore blocks for oil exploration. The committee will study the issue and present its findings to a later session.
South Sudan Faces US Sanctions
President Obama has signed an executive order that paves the way for potential sanctions on individuals and organizations accused of destabilizing South Sudan, while the United Nations and the United Kingdom are considering similar actions. At the heart of the conflict chaos is control of oil fields that would bring down the South Sudanese president, Salva Kiir. What rebels are eyeing right now is control of the Paloch oil installations in the Upper Nile State, and an attack on these strategic holdings is imminent. The only area currently producing oil in South Sudan is the Upper Nile State, which has been the focal point of a bloody power struggle since late last year. If rebels manage to gain full control of this area, they will succeed in halting production and exports and for all intents and purposes squeeze Kiir out of office by ensuring that he has no funds to keep the government running.
Angola: Output Good, Deals in Motion
The government of Angola has released oil production figures for the first quarter of 2014, showing a total of 1.623 million barrels per day during that period. Last week, Genel Energy, led by former BP head Tony Hayward, announced it had purchased stakes in two offshore exploration blocks in Angola from Norway's Statoil. The two blocks cover 14,000 square kilometers and are between 1.5 and 2.5 kilometers deep. Drilling is slated to begin in the second quarter of this year.
Ukraine: Chaos Rules Ahead of May Presidential Elections
In Ukraine, foreign investors are now seeing the side effects from Russia's annexation of the Crimea, which will affect investments across the board. Ukraine has been grappling with the fate of a key oil refinery in Odessa, whose ownership had been transferred to a Russian bank in a dubious transaction. Earlier this week, in an attempt to regain control of the refinery, Kiev announced it was moving to nationalize the refinery due to fraudulent activity. According to Russian media sources, the refinery's previous owner, Vetek, had transferred the refinery to Russia's VTB bank when it defaulted on a loan it had received to purchase the refinery from Lukoil last year. Vetek is control by Serhiy Kurchenko, who has enjoyed the favoritism of close ties to ousted Ukrainian president Viktor Yanukovych. Kurchenko fled Ukraine after a warrant was issued for his arrest earlier this month.
At the same time, there is rising concern over the implications of a 7 April declaration of the "People's Republic of Donetsk", and whether pro-Russian activity in this Ukrainian region could lead to a repeat of the Crimea incident. For the time being, our assessment is that protests in the Donetsk region are not likely to lead to a direct referendum on unification with Russia unless Moscow steps in as it did in Crimea.
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