What consequences will the Libyan conflict have on the Italian energy and oil interests?

We have recently talked about the role of Italy in the Libyan conflict and the interests our country has at stake there here on Italics Magazine. But to understand more about this tangled topic, we spoke to Michele Marsiglia, President of FederPetroli Italia.

The relationship between Italy and Libya is marked by colonialism, migrations and, most of all, energy. How important is oil in connecting the two countries today?

Undoubtley, oil plays a fundamental part in the relationship between Italy and Libya. During the last couple of years, however, trade relations have been extended to other sectors that have nothing to do with oil and gas, but that are important for the Italian industrial network. Nevertheless, considering the objective nature of the situation and the lack of communication on the Italian side, we cannot consider our country to be as privileged as it used to be, both in Libya and other parts of the world.

The conflict has been going on for years, and a solution seems far to be reached. Which consequences could it have on our production activities? How are the infrastructures suffering from this situation? 

First of all, it’s impossible not to mention the lack of productivity in oilfields and related wells. Just these days, the Libyan National Oil Corporation (NOC) released official information about the economic losses due to the reduction of oil exports: about 2.3 billion dollars, which equals roughly 125.000 barrels a day.

Since 2011, both the Libyan oil industry and the international companies that operate in the North-African country are living in a perpetual situation of stop-and-go, with enormous damages to the abandoned infrastructures and resulting economic losses which tripled the value of building contracts.

At the moment, the situation regarding oil productivity in Libya is stationary. The wells are controlled by General Haftar militias and energy productivity is marginal. This means that the country is producing only what is deemed to be strictly necessary for the domestic population.

At a geopolitical level, Italy is becoming weaker and weaker. How can we maintain a prominent role in Libya?

In the present situation, it is unthinkable for Italy to maintain a firm leadership, and the times when we could have been considered a strategic partner have been and gone.

The Italian strategy of remaining neutral, keeping distances both from General Haftar and Prime Minister Serraj, hasn’t been perceived as an act of diplomacy but rather as an instance of political indifference. Such a position contributed to promoting a negative image of Italy in the Middle East and in part of the African continent, where our country is not very popular.

With the Berlin Conference and the attempts at mediation between Haftar and Serraj, Italy has shown political ambiguity: how are we acting on the diplomatic scene,  and which would be the best solution for the Libyan crisis from our standpoint? 

For sure, we are witnessing a clear failure of the United Nations within the context of the conflict. I recall what I said a few moments ago: “political ambiguity” means that Italy does not have the firmness and the ability to decide. Berlin was a total failure, it was a conference for Libya but without Libya. This shows that the ceasefire that was adopted there has never really existed. For a long time, Libya has been asking Italy to be the only mediator in the war. But apparently, someone in our government is not taking the hint and, therefore, we are losing important business and commercial opportunities, to the benefit of other countries.

The Libyan conflict is draining and — it’s fair to say that — it has been going on for way too long. The attempts of issuing ceasefire orders, as well as diplomatic mediations, always seem to end up in a stalemate. How and in what measure are the Libyans really being taken into account in the negotiation processes? 

When it comes to the Libyan negotiating table, some places are being left empty. The majority of talks and meetings aim at safeguarding other countries’ interests related to the Libyan activities, overshadowing the need for internal balances in the country. This is ridiculous and the Libyan people are very well aware of it. As FederPetroli Italia, we have always claimed that the real problems, in Libya, need to be solved from within the country, even though external assistance is of course needed. A conflict that is managed by other actors, especially in the Middle East, scales up and becomes an ever more dangerous ticking bomb. This is what we are witnessing.

More and more countries like Russia, France, and Turkey, are entering the Libyan scenario. Which of these geopolitical powers could endanger the Italian energy and political interests, and why? 

All of them. When a country loses its industrial, economic or social leadership in a context as complex as the African or Middle-Eastern one, everyone becomes a potential competitor. Without any doubt Russia, Turkey, and France are the main threats — also considering the envy that the long-time presence of ENI (the Italian multinational oil and gas company) in the country could provoke. Keep in mind that he company has been operating in Libya for more than 40 years.

In your opinion, was it a mistake to partake in the international military intervention in Libya back in 2011? Were there any alternatives?  

Our friendship with Saif Al-Islam Gaddafi is well known, so we must firmly condemn what happened in 2011. The problem lays in the fact that, until 2011, the oil and gas sector was really growing at a dizzying pace, and no one could complain about it.

During the Gaddafi era, Italy was involved in great production processes related to oil fields and the development of important infrastructures both in the Cyrenaica and Tripolitanian regions. Not only oil was a profitable, winning product: other industrial sectors were starting to develop in the North-African country, sectors that, today, are not active anymore. The alternative, at the time, was to hold a dialogue. But someone preferred war.

Libyan oil reserves are still promising, but the geopolitical context remains extremely complicated. In your opinion, should Italy keep focusing on Libya, or would it be better to start looking for other options? 

FederPetroli Italia is largely involved in a series of operations regarding the expansion of the oil and gas sector in Libya. We are key players in the area, with solid relationships both with ENI and other contractors, including Mellitah Oil & Gas, in partnership with the Libyan National Oil Corporation.

The exploitation of oil in Libya has just begun, even though this may seem unlikely to believe. There are huge reserves yet to be exploited in the south-central areas of the country and then, of course, the Mediterranean OffShore part which is the most disputed one, also with Russia and Turkey.

For what concerns oil, the Middle East is currently the neuralgic center for the mineral resource, and it will remain so for many years to come. In spite of the US’ developments in the field of fracking, Middle Eastern wells give excellent results in terms of profitability and optimization of research and production costs.

Link: https://italicsmag.com/2020/03/09/italy-libya-and-oil-what-is-at-stake/