Russian-German oil ambitions pose potential security risk to Libya

United Nations photo captures anti-Qadhafi uprising anniversary celebration. Libya, with its political crises and conflicts of recent history, looks onward for the future, but will the nation be dragged into a further geopolitical power struggle?

Russian oil production in Libya resumes 

Biden administration floundering on sanction enforcement 

By Rachel Brooks

May 26, 2021 

Commentary 

Opinions expressed in this article are attributed solely to the author and do not reflect an official agenda of Republic Underground. 

The Russian oil industry has been the center-focus of heated geopolitical debate over the past week, as the American president, Joe Biden, lifted sanctions on the Nord Stream 2 pipeline. Fox Business reports Biden’s given reasons for lifting the sanctions were “because the project was almost completely finished.” Biden stated that levying sanctions would be “counterproductive” due to the project’s advanced state. He drew criticism for allowing it to continue while canceling production on the American domestic gas project Keystone XL. 

 As the debate continues to circulate over the security ramifications of greenlighting Nord Stream 2’s progress without further sanctions, Russia ramps up its oil production. The Russian-government-backed agency TASS stated that Russia’s Gazprom has resumed oil production in war-torn Libya. The TASS report was relayed in English by the Turkish pro-government news outlet Daily Sabah. 

TASS cited Sergey Tumanov, the managing director of Gazprom EP International, a Gazprom subsidiary. Tumanov stated that production is back on track after Russia was “forced to stall” production in Libya for 10 months. Ports, export terminals, and production facilities have all begun to resume normal production. Tumanov also relayed progress made in Gazprom’s joint venture with German company Wintershall Dea.

“We transferred the duties of the field development operator in units 91 and 107 in the Sirte Basin to the joint venture we established with the Libyan National Petroleum Company (NOC),” said Tumanov, as he was quoted by Daily Sabah.

Russian and German oil production proceeds thus in a region where oil production has been drawn into a protracted conflict between the Libyan Government of National Accord and the opposition movement of the warlord Khalifa Haftar. Haftar continues his pursuit of his vision of a unified Libya, and as Africa Intelligence reports, may groom his son Saddam Haftar to suceed him as commander of his forces, as the younger Haftar exercises feats of ambition to prove he is the man for this role.

Russia continues its reported support of the Libyan National Army that Haftar commands, writes Africa Intelligence.  The European Council on Foreign Relations  commented on Germany’s role as an arbiter of the conflict, stating that Germany’s role, as far back as 2019, was one of quiet leadership and good relations with “all sides.” Russia and Germany’s presence in Libya, in increased production, stands in contrast to the Turkish military presence in Libya. Turkey’s planned logistics and talks to secure oil rights in the region that sees a revived interest of Russian-German oil ambition may reflect upon the political tensions, which Africa Report referred to as a “proxy conflict” between Russia and Turkey in the region. 

Against this proxy-conflict scenario backdrop, Russian gas production will nonetheless increase in the region.

The Libya Herald reported that the Gazprom production in Libya will rise from 43k to 62k barrels a day. The journal cited the Gazprom in-house magazine as the source for the Tumanov interview with TASS Agency. 

“In the fall of 2020, after nine months of suspension due to the force majeure declared on Libyan territory, oil production within the framework of our Libyan asset was successfully resumed,” said Tumanov. 

“Ports, export terminals, and production facilities started to gradually resume their operations in the country. At the same time, we completed an important stage of the works in Libya under our joint venture with Wintershall Dea, Wintershall Aktiengesellschaft (WIAG), as we transferred the functions of the operator of development of fields in the Sirte Basin in Blocks 91 and 107 to a newly established joint venture with the Libyan National Oil Corporation (NOC), Sarir Oil Operations B.V. (SOO) company,” said Tumanov, as he was quoted by The Libya Herald. 

Production is thus underway for Russian-German gas ambitions across an interregional board. The U.S. response to this increasing partnership has sent mixed signals. While the Biden administration continues to act on advice it receives, it also continues to send messages of opposition to the big oil industry. This is in similar fashion to the Biden administration’s mixed-signal stance on MENA security issues, such as its promise to levy stiffer U.S. foreign policy against Turkey, yet, in February, expressed desire to disengage the United States in Libya, an area that has a noted presence of Turkish-Russian military rivalry, as was stated by the Africa Report.

Upstream Energy reported that the Biden administration was advised not to levy sanctions against the NordStream 2 project due to fears that such an action would “damage the U.S. relationship with Germany.” Despite this advice, the administration was vocally opposed to the gas project and has since reiterated its objection to it. 

Politically, the Biden administration is pro-sustainability and climate policy and has voiced opposition opinions to the major oil and petrol chemical industry. The Biden administration levied sanctions on 13 Russian-owned vessels including the pipelay Akademik Cherskiy. This follows in coordination with the official U.S. stance that the pipeline is a threat to European security. This security tensions escalation may also reflect on interregional security, as Russia and Germany, the two nations taking heat for the Nord Stream 2 project, are also in production together in the politically fraught Libya.

While the Biden administration believes further sanctions on Nord Stream 2 to be ineffective at this stage, they did have an impact on project funding earlier this year. Under the threat of U.S. sanctions, the Wintershall Dea company suspended its funding to the Nord Stream 2 project, wrote SP Global in February. 

Upstream reported that Germany’s Uniper and Wintershall Dea, Austria’s OMV, Anglo-Dutch supermajor Shell, and France’s Engie had all been pressured by the Polish watchdog group Poland’s Office of Competition & Consumer Protection to annul agreements with Nord Stream 2, to fund the project in exchange for 10 percent stakes in the pipeline. Nord Stream faces continued legal contingencies with the European Commission which calls to restrict Nord Stream 2’s annual production under the anti-monopoly gas market regulations of the European Union. 

The challenge the oil project now faces is a successful appeal of the production waivers the European courts will impose upon it. This comes as the European Union imposed hefty fines on Gazprom and the five entities involved in the Nord Stream 2 funding agreement for ignoring an earlier ruling against monopolies that applies to all EU member states and proceeding with forming a joint venture. 

German Chancellor Angela Merkel reportedly “applauded” the Biden administration’s decision to waive sanctions on the project, and states that she plans to hold talks with the U.S. president at the G7 Summit. The U.S. President likewise intends to hold talks with Russian President Vladimir Putin to “ease some of the tensions” between the U.S. and Russia, Upstream reported. 

The TASS agency quoted Wintershall Dea on Tuesday, as the German firm stated Russia would “contribute to European gas” for “several decades.” TASS quoted an interview with Gazprom’s in-house magazine which spoke with a member of Wintershall Dea’s Executive Committee, Thilo Wieland. 

“If we look into the future, then I am confident Russia will continue making a material contribution to energy supplies to Europe over the next several decades as well. Not merely because of the availability of resources but also in view of the opportunity to produce hydrogen from natural gas by methane pyrolysis or steam reforming, thereby contributing to the further decarbonization of energy supply,” said Wieland, as he was quoted by TASS. 

A relaxation of American economic policy may send signals of increased production collaboration between the two nations, domestically as well as abroad. The American intervention had previously sought to disrupt Kremlin-backed militia control of Libya’s oil facilities. 

Under the Trump administration, the actions of Russian oil producers in Libya created tensions with the American government, wrote The Wall Street Journal in July. The WSJ reported that two military contractors linked to the Kremlin had seized control of Libya’s oil fields and exports from its major exporting port, Es Sider.

On Wednesday, geopolitical experts met with Republic Underground to discuss the hidden role of the energy sector in economic warfare and geopolitics. 

Russian forces and U.S. forces engaged in confrontations in Syria’s Deir Ezzor province during this era, as the U.S. and Russia continued to fight for dominant influence in the oil theater of the MENA.

Under the Biden administration, a signal shift in U.S. oil interests in the region of Libya and Syria has been marked with the recent decision to “ax the waiver” for Kurdish-led northeastern Syria that was granted by the Trump administration in April 2020. The waiver allowed the American oil company Delta Crescent Energy to “produce and sell oil’ in Syria, as was reported by Al-Monitor. The company’s waiver expired on April 30 and the company was given a 30-day grace period to suspend its activities in northeastern Syria. Administration officials proposed that this action was a “policy correction” and not “a policy shift,’ as oil production in Syria is heavily sanctioned and regulated under the Caesar Act.  

Russia, with the influence of the Wagner group, continues to make a power play for oil in the Middle East and North Africa. Earlier in May, Foreign Policy reported that the Wagner Group was behind the companies that reached recent oil deals made with the Syrian government. An oil deal was reached with the “previously unknown” Russian company Kapital, which was ratified by the Assad regime in March. Wagner Group-brokered oil deals are expected to cause potential tensions with Lebanon, which argues that the area that Russia will explore for oil in Syria crosses into Lebanese sovereign waters. 

As the ambitions of Russian and German oil collaborations cross into complex geopolitical theaters, and as the western response to regulation and mediation of these sphere changes, potential risks present themselves. To what degree and to what end that risk may present has yet to be revealed. One thing that has, however, been expressed is the western tendency to shift its stance on geopolitical structure and strategies without clearly and consciously stating this intention.

Whether a deliberate shift in regional motives, or the unconscious actions of a newly-minted administration, the American stance in the MENA-Gulf region is changing, and American rivals, such as Russia has been known to be, are poised to take advantage of the new signals the western counterpart sends.