16 Mar 2014 More

Oil Tanker Bound for Libya Seized by Navy SEALs

posted by Unknown @ 09:43 1 Comments

Image of seized oil tanker
Attempts by Libyan rebels to sell oil on the open market was thwarted when US Navy SEALs boarded the oil tanker Morning Glory.  This was the first known attempt by rebels to sell oil on their own, bypassing the central government there.

The tanker was seized just southeast of the isle of Cyprus in the Mediterranean at 10PM ET Sunday.  The vessel is reported to have left the Libyan port city of Es Sider on March 11 after loading the crude and will be re-routed with US sailors remaining on board until it reaches its final destination back in Libya.  The vessel will then be turned over to Libyan officials.

“It’s definitely a setback for the rebels,” says Theodore Karasik, director of research at the Institute for Near East and Gulf Military Analysis. “It shows the government has the backing of the international community, and it makes it more difficult for the rebels to become autonomous by selling oil.”

The event itself triggered the ousting of Libya’s Prime Minister Ali Zaidan who will now be replaced by Defense Minister Abdullah Theni.  Four of Libya’s nine oil ports were occupied by rebel forces as of the end of July.

What this means for Libya

Libya has suffered a dramatic drop in oil exports ever since the overthrow of long-time dictator Muammar Qaddafi back in 2011.  Crude oil production has now slipped to just 350 mbopd.  That’s down from an average of 1.59 mmbopd back in 2010, before the revolution.

Libya is a member of OPEC and therefore the drop-off in production does have global output implications, which in turn affects the price of oil.  The reduction in Libyan output is one of the reasons why Citigroup analysts have raised their outlook for Brent crude from $93 to $103 per barrel.

“No one was hurt tonight when US forces, at the request of both the Libyan and Cypriot governments, boarded and took control of the commercial tanker Morning Glory, a stateless vessel seized earlier this month by three armed Libyans,” the Defense Department says.

Seizure has North Korean twist

So how did North Korea get mixed up in all this?  Quite by chance, this according to officials from North Korea.  The Libyan vessel was flying a North Korean flag at the time of its seizure.  North Korea however says that the ship’s registry was cancelled after it received notice from Libya itself.

The US State Department had warned any potential buyers of the ship’s illegal cargo that they could be hit with sanctions.  The State Department became involved as the ship’s cargo was a joint venture between the Waha Oil Co., the Libyan state oil company, and US oil companies Marathon Oil, ConocoPhillips, and the Hess Corp.

The incident could help to restart talks between rebels and the Libyan government on a new formula for oil revenue sharing.  On the other hand, it could exacerbate tensions between the two factions.

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