Libya: Renewed fighting expected as eastern province seeks autonomy

Abdul-Jalil, leader of Libya's National Transitional Council

Eastern Libya will declare itself as an autonomous province, according to a report from the London-based Exclusive Analysis, thus increasing the risk of further war and risks to global oil prices.

The region – called Barqa – will become a self-governing state within a federal Libya. The new state will extend beyond historical Cyrenaica to include part of oil-rich Fazzan in the Gulf of Sirte. Eastern Libya has 66% of Libya’s oil production but only 25% of its population.

The report from Exclusive Analysis reported that 'Barqa' (Arabic for Cyrenaica) and its territory will stretch from the Egyptian border in the east to the city of Sirte in the west. It was Sirte that served as a stronghold of the rebels who eventually brought down the government of Muammar Gaddaffi. The declaration will stipulate that Barqa will have its own parliament and separate oil, defence and finance ministries, and its own army. The report noted taht a so-called 'Barqa Army' has already been formed out of former eastern-based units of Gaddafi's Army and the rebels’ eastern militias.

The Tripoli government is likely to use force to contest the eastern Libya's declaration of autonomy. It does not have the capability to reverse the declaration but is likely to contest control of key towns in the Gulf of Sirte and the Waha and Raquba oil fields.   Barqa's autonomy would increase contract and non-payment risks in construction and infrastructure, but probably not in the oil sector, particularly for firms with contracts with Arabian Gulf Oil Company (AGOCO).

Risks are especially high for Chinese, Russian and South Korean firms, due to their governments' perceived support for fallen dictator Gaddafi. Firms from these countries are very likely to see their contracts cancelled following corruption investigations.  The EA report predicted that Exploration and Production Sharing Agreements (EPSA) are unlikely to be reviewed or cancelled, especially for American, British and French firms, though the Italian firm Eni's project in Bu Attifel will be at higher risk of contract revision.

 



Spero News editor Martin Barillas is a former US diplomat, who also worked as a democracy advocate and election observer in Latin America. He is also a freelance translator.

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