The Illegal Trafficking in Crude Oil and Petroleum Products from Libya and the Relationship Between Italy and Malta

Control over oil resources has been a key factor in the situation of civil war and political turmoil that has affected Libya in this decade.[1] Already in 2011, a turning point in the struggle against the Qhadafi Government took place when the insurgents of the Transitional National Council proved that, by controlling the eastern ports of Brega and Ras Lanuf, they were able to trade in oil with foreign corporations.[2] In the ensuing period, and especially between 2014 and 2018, the competition between rival governments was constantly mirrored by the struggle to gain control over oil resources and, most notably, over the National Oil Corporation (NOC).[3] In 2014, in a paradoxical twist of history, the stability of the revolutionary government that had ousted Qhadafi was seriously put into question when a group of “Petroleum Facilities Guards”, led by a Ibrahim Jadhran, came to control the same eastern ports that had been instrumental to the demise of the previous ruler.[4] A stateless tanker was able to leave port against the will of the Tripoli Government and was subsequently inspected, seized on the high seas, and brought back to port in Libya by an operation of the US Navy.[5] In 2015, the House of Representatives of Tobruk attempted to establish a new National Oil Corporation with headquarters in eastern Libya claiming that the NOC based in Tripoli had no legitimacy and that new contracts had to be negotiated with the eastern NOC.[6] The initiative had little success as the NOC and the UN-backed Government of National Accord (GNA) based in Tripoli remained the sole official interlocutors of the international corporations operating in Libya.[7] However, the situation of uncertainty with respect to control over the main oil fields of the country persisted.[8] In July 2018, when the Libyan National Army (LNA) of General Khalifa Haftar took control of the eastern oil fields, attempts to sell oil through the eastern-based oil corporation started again, allegedly with the assistance of the United Arab Emirates.[9] This prompted a reaction by the United States, France, the United Kingdom and Italy, which is commented upon here below.

Repeated attempts to illicitly export oil from Libya were condemned by the UN Security Council, which clearly supported the position of the GNA. With Resolution 2146 (2014) the Council requested that the GNA contact the Sanctions Committee previously established by Resolution 1970 (2011) “to inform the Committee of any vessels transporting crude oil illicitly exported from Libya”.[10] The Resolution then authorized Member States, after seeking consent by the vessel’s flag State, “to use all measures commensurate to the specific circumstances […] to […] direct the vessel to take appropriate actions to return the crude oil, with the consent of and in coordination with the Government of Libya, to Libya”.[11] Moreover, it was made clear that all Member States were under an obligation to “take the necessary measures to require their nationals and entities and individuals in their territory not to engage in any financial transactions with respect to such crude oil from Libya aboard vessels designated by the Committee”.[12] Subsequently, Resolution 2174 (2014) expanded the reasons for listing individuals and entities in the sanctions lists mentioning explicitly those “providing support for armed groups or criminal networks through the illicit exploitation of crude oil or any other natural resources in Libya”.[13] Resolution 2362 (2017) expanded the applicability of the measures adopted with Resolution 2146 (2014) to petroleum, including crude oil and refined petroleum products. In a number of resolutions, the Security Council reiterated that the resources of Libya must remain under the sole control and authority of the GNA and the NOC of Tripoli.[14]

Within this context, the position of the Italian Government has consistently supported the GNA by affirming clearly that the right to control and administer the oil resources of the country pertained exclusively to the NOC. During the course of 2018, Italy participated in the adoption of two joint statements (together with France, the United Kingdom and the United States) dealing directly with the issue of control over Libyan oil resources.

The first joint statement was adopted on 27 June 2018 [15] after the forces of the LNA led by General Haftar had taken control of the eastern ports of Ras Lanuf and Sidra.[16] The first part of the statement reads as follows:

The Governments of France, Italy, the United Kingdom, and the United States are deeply concerned about the announcement that the Ras Lanuf and Sidra oil fields and facilities will be transferred to the control of an entity other than the legitimate National Oil Corporation. Libya’s oil facilities, production, and revenues belong to the Libyan people. These vital Libyan resources must remain under the exclusive control of the legitimate National Oil Corporation and the sole oversight of the Government of National Accord (GNA), as outlined in UN Security Council Resolutions 2259 (2015), 2278 (2016), and 2362 (2017). UN Security Council Resolution 2362 (2017) condemns attempts to illicitly export petroleum, including crude oil and refined petroleum products, from Libya by parallel institutions which are not acting under the authority of the GNA.

The statement then warned that:

The international community will hold those who undermine Libya’s peace, security, and stability to account. We call for all armed actors to cease hostilities and withdraw immediately from oil installations without conditions before further damage occurs. In September 2016, the LNA supported the legitimate National Oil Corporation’s work to rebuild Libya’s oil sector for the benefit of the Libyan people. This action served Libya’s national interest. The legitimate National Oil Corporation must be allowed again to take up unhindered work on behalf of the Libyan people, to repair infrastructure damaged after the attack by forces under the direction of Ibrahim Jadhran, and to restore the oil exports and production disrupted by that attack.

On 11 July 2018, after an agreement between the LNA and the GNA was found, the second joint statement[17] by the Governments of France, Italy, the United Kingdom, and the United States welcomed “the announcement that Libya’s National Oil Corporation [was] resuming its vital work on behalf of all Libyans”, commended the NOC “as it repairs infrastructure, honors its contractual obligations, and […] restores oil exports and production critical to Libya’s prosperity”, and praised the LNA for its “contributions to restore stability in Libya’s oil sector”. The joint statement then continued as follows:

Libya’s oil facilities, production, and revenues belong to the Libyan people. We reiterate that the National Oil Corporation must be allowed to work on behalf of all Libyans, and that Libya’s oil resources must remain under the exclusive control of the legitimate National Oil Corporation and the sole oversight of the Government of National Accord (GNA), as outlined in UN Security Council Resolutions 2259 (2015), 2278 (2016), and 2362 (2017).

Also in this case, the statement ended with a warning:

The Governments of France, Italy, the United Kingdom, and the United States pledge to support Libyan leaders in pursuing these measures and will use all tools at our disposal to hold accountable those who undermine Libya’s peace, security, and stability.

It is noteworthy that the consistent support, expressed by these statements, for the right of the GNA to control the oil resources of Libya is fully in line not only with the relevant resolutions adopted by the UN Security Council, but also with the position of the European Union. In this respect, on 28 June 2018, a statement of the Spokesperson for Foreign Affairs and Security Policy,[18] Ms Maja Kocijancic, expressed the position of the EU as follows:

The European Union and the rest of the international community, as set out in several UN Security Council Resolutions on Libyan oil, have consistently opposed any attempt to sell or purchase Libyan oil outside the official channels managed by the Libyan National Oil Corporation (NOC). The oil infrastructure, production, and export need to remain under the exclusive control of the NOC, with all oil revenues transferred to the Central Bank of Libya (CBL). Recent statements calling for oil exports from the Eastern oil terminals to be approved by entities other than the legitimate NOC are therefore unacceptable and contravene UN Security Council Resolutions. Any illegal action that may jeopardise the country’s oil industry must be avoided. The European Union will, together with its Member States, continue to counter any attempt to trade Libyan oil outside the internationally recognised official channels.

Indeed, already on 25 July 2017, the Council of the European Union had prolonged its naval operation Sophia widening its mandate to include “surveillance activities and gather information on illegal trafficking, including information on crude oil and other illegal exports that are contrary to UNSCR 2146 (2014) and UNSCR 2362 (2017)”.[19] The Council decision also affirmed that the “information gathered in this context may be released to the legitimate Libyan authorities and to the relevant law enforcement authorities of Member States and to competent Union bodies”.[20]

Illicit trade in Libyan oil and fuel became of paramount importance in the Italian political debate also because, during the course of 2017 and 2018, journalistic and judicial investigations revealed that a network of smugglers was stealing Libyan diesel from the Zawyia refinery and illegally importing it to Italy.[21] With operation “Dirty Oil”, in 2017, the Italian Customs Corps documented more than 30 trips in which over 80,000 tons of diesel were imported by sea from Libya, for a value of about 30 million euros. Diesel fuel was stolen from the NOC and, once arrived in Italy, hiding its origin through screen companies in Malta, it was placed on the Italian and European market at a price similar to the market one, despite being of inferior quality. In 2018, these issues were raised and described in detail by a written parliamentary question (No. 3-00062, Quartapelle Procopio) before the Camera dei Deputati (Chamber of Deputies). The author of the question recalled that, on 16 October 2017, Daphne Caruana Galicia, a Maltese investigative journalist, was murdered with a car bomb while investigating “the opaque links between politics and black finance that would have made of Malta a crucial junction of money laundering in the heart of the European Union”. She then recalled that eighteen newspapers from all over the world decided to give life to the “Daphne Project” to continue the investigation in the matter. According to Ms Quartapelle Procopio, the new journalistic investigation reported that the fuel smuggling circuit Libya-Malta-Europe did not seem to have changed “since the Maltese authorities have not yet taken charge of verifying the authenticity of the certification of the origin of the oil arriving and leaving the island”. In the light of the above, she asked “which political and diplomatic initiatives, both bilaterally and at European level, the Minister intends to adopt to ask the Maltese authorities to shed full light on the matter and obtain more guarantees on the origin of the oil that Malta exports”.

On 10 July 2018, the Undersecretary of State for Foreign Affairs and International Cooperation, Mr Manlio Di Stefano, answered the question before the Chamber of Deputies (23rd Meeting, XVIII Legislature). He stated:

We are facing a very complex issue, which involves diplomacy, the judiciary and State administrations. It is a question in which, above all, judicial collaboration plays a central role. On 15 June, Minister Moavero Milanesi emphasized directly to his Maltese counterpart the importance of this collaboration, reiterating his wish for strengthening it. Although the need to intensify the fight against organized crime and financial crimes resulting from Libyan instability was clear to everyone, in the past years, probably, not enough has been done and we find ourselves today in a complex situation. To date, a security expert from the State Police and an expert from the Guardia di Finanza, who completed a mission to the island last month, are accredited to the Maltese authorities.

The Undersecretary then stated that, at the multilateral level, Italy supports the European Union’s position expressed by the 28 June statement of the spokesperson of the external service. According to the Undersecretary, the European Union and the rest of the international community “have always opposed any attempt to sell or buy Libyan oil outside the official channels managed by the Libya National Oil Corporation”, which “must, indeed, control oil infrastructure, production and exports, transferring all the proceeds to the Central Bank of Libya”. He described the activities of judicial cooperation with Malta as follows:

[…] I highlight the visit of the anti-mafia and anti-terrorist national prosecutor, Federico Cafiero De Raho, to La Valletta last 4 July, who after having met some of the country’s political and police leaders, signed an agreement with the Chief Prosecutor of Malta to strengthen cooperation in the fight against organized crime, including the financial crimes referred to in the question. This is obviously the first step to strengthen, in the coming months, the collaboration between Italian and Maltese authorities even in cases similar to that raised by the honorable author of the question […].

He then described the state of the on-going criminal proceedings in Catania and Siracusa concerning multiple episodes of laundering of diesel of illicit origin, which had entered the Italian market thanks to false certificates of origin, submitted by Maltese companies and endorsed by the Maltese Chamber of Commerce. He stated:

Between September and October 2016, two requests for judicial assistance were sent to Eurojust and, only following numerous reminders, in January 2018, the Maltese judicial authority followed up those requests, which were also partially dealt with. The proceeding to date is at the preliminary hearing phase. On 24 May, the judge at the Catania court issued the decree ordering the trial against nine defendants, of which two are of Maltese nationality, while at the Siracusa court the trial phase will start in these days.

He then described the activities of fiscal and customs controls carried out by the Guardia di Finanza in collaboration with the Revenue Agency, clarifying that, from 1 January 2017, over 1,500 tons of energy products had been seized. He concluded by saying:

Our Government, therefore, intends to put all possible effort to guarantee the legality of trade at any level, because it is in the interest of our country, obviously, of the European Union and of countries, such as Libya, which are also destabilized by these illicit traffics. For us, therefore, it is a subject of primary importance, but, obviously, in facilitating these paths the need for equal interaction by the Maltese Government should not be underestimated.

Overall, as demonstrated by these official statements adopted in 2018, the Italian position with respect to the export of crude oil and petroleum products from Libya is rather straightforward and consistent. The Italian Government has repeatedly taken the view that only the UN-backed Government of Libya has the right to authorize trade and the selling of the natural resources of the country. The same position has been confirmed by the investigations and the trials initiated by the Italian judicial authorities. From this perspective, there seems to be no room for the exercise of sovereign powers over national wealth and natural resources by groups of insurgents, even if they temporarily control a part of the territory.

[1] For an overview, see Baltrop, Oil and Gas in a New Libyan Era: Conflict and Continuity, Oxford Institute for Energy Studies Paper 22, 2019, available here.

[2] “Rebels say Qatar Ready to Market East Libyan Oil”, Reuters, 27 March 2011, available here. See also Pertile, “On the Financing of Civil Wars through Natural Resources: Is There a Duty of Vigilance for Third States on the Activities of Trans-National Corporations?”, in Seatzu, Bonfanti and Romanin Jacur (eds.), Natural Resources Grabbing. An International Law Perspective, Leiden, 2015, p. 383 ff., pp. 396-397.

[3] Baltrop, cit. supra note 1, pp. 18-19.

[4] “The prize: fighting for Libya’s energy wealth”, Crisis Group Middle East and North Africa Report No. 165, 3 December 2015, pp. 13-14, available here.

[5] “SEAL Team Raids a Tanker and Thwarts a Militia’s Bid to Sell Libyan Oil”, The New York Times, 17 March 2014, available here.

[6] Baltrop, cit. supra note 1, pp. 18-19.

[7] Final report of the Panel of Experts on Libya established pursuant to resolution 1973 (2011), 5 September 2018, S/2018/812, pp. 37-38.

[8] In July 2018, for instance, the NOC was forced to shut four oil fields that came to be controlled by General Khalifa Haftar of the Libyan National Army. See “Four Libya oil ports closed amid corruption allegations”, The Guardian, 2 July 2018, available here. See also “Libya’s eastern national oil corporation calls on UN to allow oil exports”, Xinhua, 5 July 2018, available here.

[9] “U.A.E. Backed Militia Leader’s Bid to Take Control of Libyan Oil Exports”, The Wall Street Journal, 13 July 2018, available here.

[10] Resolution 2146 (2014), para. 3. See also Resolution 2278 (2016), para. 3, with which the UN Security Council urged “the Government of National Accord to provide regular updates to inform the Committee on ports, oil fields, and installations that are under its control, and to inform the Committee about the mechanism used to certify legal exports of crude oil”.

[11] Resolution 2146 (2014), para. 5.

[12] Resolution 2146 (2014), para. 10(d).

[13] See Resolution 2174 (2014), para. 4(c), and Resolution 2213 (2015), para. 11(c).

[14] Resolution 2441 (2018), para. 1; Resolution 2362 (2017), para. 1; Resolution 2278 (2016), para. 2.

[15] Joint Statement on Libya by the Governments of France, Italy, the United Kingdom, and the United States of America, 27 June 2018, available here.

[16] “Four Libya oil ports closed”, cit. supra note 8.

[17] Joint Statement on Libya by the Governments of France, Italy, the United Kingdom, and the United States of America, 11 July 2018, available here.

[18] Statement by the Spokesperson on the trade in Libyan oil, 28 June 2018, available here.

[19] Council Decision (CFSP) 2017/1385 of 25 July 2017 amending Decision (CFSP) 2015/778 on a European Union military operation in the Southern Central Mediterranean (EUNAVFOR MED operation SOPHIA).

[20] Ibid.

[21] See, for instance, “Malta: il paradiso dei trafficanti”, La Repubblica, 3 May 2018, available here. In general, on fuel smuggling from Libya, see also Eaton, Libya’s War Economy: Predation, Profiteering and State, Research Paper, Middle East and North Africa Programme, Chatham House, April 2018, pp. 14-17, available here.

Mr Manlio Di Stefano, Chamber of Deputies, 10 July 2018.

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