The civil war enforced by the warlord Khalifa Haftar in Libya has brought oil production and exports to a grinding halt, creating financial strain on the UN-recognized Libyan government based in capital Tripoli. Till 2014, the North African country on the banks of the Mediterranean Sea was ranked among the top 20 oil-producing countries.
Due to the closure of oil wells and restrictions put by pro-Haftar armed groups, the Libyan economy suffered a loss of $5 billion in January 2020. From 2016-2019, the country has already lost more than $100 billion, as Ibrahim Cadran, an Haftar ally interrupted the oil excavation in the east of the country.
While international energy institutions say that most of Libya’s oil reserves have remained untapped, the conflict has hit extraction of oil from the existing resources. The country’s largest oil and gas facilities, such as Sidra, Ra’s Lanuf, Brega, and Zueitine, are located in the war-torn east of Libya on the Mediterranean coastline.
The Sidra refinery can produce 350,000 barrels of oil every day. The daily production capacities of other refineries like Ra’s Lanuf are 220,000 Zueitine 100,000 and Briga 8,000 thousand barrels. Libya’s hydrocarbon resources used to meet the demand of around 70% of national expenditure. AS much as 93 % of the government revenues and more than 90 % of exports were met by oil revenue until Muammar Gaddafi regime was overthrown in 2011.
The country had recorded the production of 1.6 million barrels of oil in 2010, which dropped significantly due to instability and different groups fighting to take control of resources.
The country’s Central Bank has reduced its reserves to the lowest level in its history to meet the requirements of paying salaries to government employees and basic expenditures on food, health, and education.
The lack of finances has led to severe economic crises in Libya. The country is facing high inflation, depreciation of the local currency, and the rise in public debt.