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The interim Libyan gov’t resumes oil exports

(The Telegraph) — According to the European Union, 80 per cent of Libya’s oilfields are now under the control of the opposition forces.

For the first time in over a week, oil was shipped from the eastern port city of Tobruk, deep in territory that has fallen to a civilian-led insurrection that has styled itself the Free Libya movement.
A tanker carrying 700,000 barrels of crude oil sailed for China, with a second bound for Italy due to leave in the next 48 hours.

Such quantities may be trifling when compared the vast amount of oil in the world’s waterways at any one time, but the resumption of Libyan exports has already done much to soothe international concern.

Oil prices have soared since the turmoil in Libya began nearly a fortnight ago, raising fears of a major setback to the faltering global economic recovery, but the cost of a barrel of Brent crude fell for the first time in days in response to the news.

That any oil is leaving Libya is little short of miraculous.

Officials involved in setting up a Libyan National Council, a de facto provisional government headquartered in the second city of Benghazi, conceded that oil production had fallen by as much as 50 per cent.

But they said they were determined to fulfil Libya’s international obligations, while ensuring that domestic demand – vital for the success of the revolt – is also met.

“The main reason to keep the oil flowing is that the crisis will be much worse, both for the international community and for us if we don’t,” said Idris al-Sharif, an official affiliated with the new authority in eastern Libya said.

Further proving the magnitude of the task ahead of the rebels, elements of the Libyan air force still loyal to Col Gaddafi bombed Ajdabiya, 100 miles south of Benghazi, striking ammunition dumps in the town.

The job of ensuring continued production and exportation in “Free Libya” has fallen to the state owned Arabian Gulf Oil Company, which ousted its pro-Gaddafi director Abdulwaris Sa’ad and now answers to the rebel leadership.

But all proceeds from oil exportation still go to the main National Oil Company in Tripoli, long the source of much of Col Gaddafi’s revenues.

Much of the oil is locked in long-term contracts, but officials in Benghazi said they hoped that they hoped to begin discussions with the international community on how to divert revenues from Tripoli to Benghazi once the national council is fully operational.

“There are various options we can look at, including the creation of escrow accounts to halt the flow of money to the regime,” one said.

In a sign that idealism has given way to realism, officials said they had abandoned plans to punish Silvio Berlusconi, the Italian leader, for his perceived support of Col Gaddafi by withholding oil. Italy depends on Libya for a quarter of its oil imports.

With Libya dependent on Italian refining technology, essential for its domestic market, any decision to exclude Italy could hurt the revolutionary cause.

Salam al Mismam, an executive at the Tobruk oil refinery, confirmed that work had resumed on ensuring that supplies to Italy were despatched as quickly as possible.

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