Fuel shortage looms for oil-rich Libya

Reporting from Port Brega, Libya —  In oil-rich Libya, where gasoline usually sells for about 45 cents a gallon, a looming fuel shortage could have major ramifications for the outcome of fighting between the forces of longtime leader Moammar Kadafi and rebels in the east.

The three-week-old rebellion has closed or crippled major Libyan refineries, which are concentrated in the rebel-held east, and has forced the opposition to import an increasing amount of gasoline from refineries abroad.

For the rebels, who ride to war in personal pickup trucks and sedans, gasoline shortages could prove a matter of life and death. The fighters fill up at gas stations at the front just like ordinary motorists, though they rarely pay, and their “peoples’ army” supply lines depend on those same gas-guzzling pickups.

“If nothing changes, we’ll be out of fuel in 10 days,” said Magdi Raid, an engineer at the state-owned Brega Petroleum Marketing Co., which controls gasoline and fuel allocations.

Khaled Ben Ali, who helps direct logistics for the rebel effort, said Friday that fighters have only a three-or-four-day cushion of gasoline on any given day at current rates of consumption. He said opposition leaders in Benghazi have dispatched 10,000-liter gasoline trucks to the front, along with private vehicles hauling gasoline in small containers.

“We’re starting to get very concerned,” Ben Ali said.

It is unclear how much importing and storage capacity the government has under its control in Tripoli, the capital, and other Kadafi strongholds. Oil officials in the rebel-held area say a major refinery in the contested city of Zawiya, 20 miles west of Tripoli, was closed this week, but Libyan oil minister Shukri Ghanem told reporters at a news conference Wednesday that the 110,000-barrel-a-day facility is operating at about 80% to 90% capacity.

In normal times, Libya imports about half its refined fuels from abroad because of a lack of sufficient refinery capacity here, according to oil engineers.

In recent days, ships bringing fuel from Europe have jacked up their rates from $700 a ton to $1,090 a ton, Raid said. Many now balk at docking at rebel-held ports following government airstrikes on the oil port city of Ras Lanuf, where there has been bloody fighting all week.

While Kadafi almost surely has sufficient funds to keep buying gasoline from abroad for his own forces, the opposition, Raid said, has to scrape up cash to pay for fuel. Government officials who control Brega marketing from Tripoli cut cash flow to its eastern offices shortly after the rebellion erupted last month.

The rebels have turned for help to the Persian Gulf, with a fuel tanker from Qatar docking Thursday in Benghazi. The United Arab Emirates has also agreed to ship fuel here to help stave of a fuel crisis in the rebel-held eastern region, according to Faisal Mowhob, an oil industry consultant and a volunteer with the opposition council running Benghazi.

“A gasoline shortage is a very real possibility,” senior manager Hassan Bolifa said at his office in the state-owned Arabian Gulf Oil Co. complex in downtown Benghazi. “It’s a big concern for us.”

Bolifa declined to say how much of the country’s imported oil is coming to the east. He said he didn’t know how much is going to western areas controlled by the Kadafi regime.

The opposition has not publicized shrinking gasoline supplies, Bolifa said, “because we don’t want to panic people — to have them get scared and drain all the gasoline in half an hour.”

The battle at Ras Lanuf, site of a sprawling petrochemical complex and port, is a struggle over both territory and control of Libya’s critical oil facilities. So has been the fierce fighting over Port Brega, another major oil complex and port city, which Kadafi’s forces are seeking to retake from rebels.

Even with Port Brega in rebel hands for now, it is not contributing to their gasoline supply. The complex’s refinery was shut down Monday, its main gate blocked by three cargo containers and its security posts abandoned. Employees have fled.

The Brega facility normally refines 15% of gasoline consumed inside Libya, according to Bolifa.

Arabian Gulf Oil, a subsidiary of the National Oil Corp., has tried to make up for some of the shortfall by operating two small refineries in rebel-controlled eastern towns at full capacity. But even combined they provide barely 5% of Libyan demand, Bolifa said.

Natural gas piped from the Port Brega complex feeds power plants in both Tripoli, Kadafi’s power base, and Benghazi, headquarters for the rebel leadership. If Kadafi’s forces recapture Port Brega after overwhelming rebels at Ras Lanuf, 85 miles west, Kadafi could cut off much of the electrical power to Benghazi and other eastern areas.

The rebels, of course, could themselves cut natural gas supplies to Tripoli. But managers at the Port Brega complex said last week, when the facility was operating at reduced capacity, that the opposition did not want to create hardships for fellow Libyans.

“We would never put our own people under siege,” Bolifa said.

Abdeljalil Mohamed Mayuf, a senior Arabian Gulf Oil manager, said the firm controls crude-oil pipelines from its oil fields south of Tripoli and would be able to deny Kadafi oil for the Zawiya refinery.

Oil minister Ghanem in Tripoli says that hasn’t happened. At the same time, the government official acknowledged that the nation’s oil production has plummeted to half a million barrels a day from 1.6 million barrels. Another oil official said that is costing the government about $100 million a day, money it could be using to buy gasoline on the open market.

Ghanem said that so far talk of an international oil ban on Libya has not included imports of refined petroleum. Many companies in the international market are willing to sell Libya gas and diesel, he said.

“We are importing. We are exporting crude and importing product,” he said. “The sanctions do not affect the gasoline.”

Ghanem, a Tufts University graduate who is also chairman of the state-owned National Oil Corp. said oil officials in Tripoli remain in constant touch with colleagues in rebel-controlled territory, including Benghazi.

“Secession is not in our mind,” he said. “Every day we are in touch by telephone. The oil industry is still one.”

Executives at Arabian Gulf Oil and Brega Marketing in Benghazi, however, said they are operating independently of Tripoli. Their focus, they said, is providing fuel for the eastern rebellion.

Bolifa said Kadafi has tried to further reduce gasoline supplies in the east by cutting state-controlled prices by 25% in an attempt to spur consumption. Raid said motorists in the east are conditioned to accept government-controlled prices, especially if they are dropping. His company hopes to introduce market-based pricing, he said.

“Mr. Kadafi is very devious,” Bolifa said. “He knows the cheap price will drain our supplies faster, you see?”

Mowhob, the oil industry consultant, said gasoline supplies from Europe are still arriving at the port in rebel-controlled Tobruk, on the Mediterranean coast. They are being augmented by the Middle East deliveries.

“We are making arrangements,” Mowhob said. “No one should panic.”

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