ALUBAF Arab International Bank is providing a letter of credit to traders willing to break an embargo on supplies of fuel to parts of Libya still under Muammar Qadhafi’s control.
In a document passed to Petroleum Economist by rebel sources, Alabuf offers a “standby letter of credit” for the supply of 20,000 tonnes of gasoline to Zawiyah, a port in western Libya.
The letter of credit is addressed to Raseel Import and Export, a Jordanian firm, guaranteeing payment from a company called SMS Trading, of Tunis, which is understood to be the recipient of the fuel.
Alubaf, based in Bahrain, is 97.11% owned by Libyan Foreign Bank. Its Tunisian branch has operated since 1986. A source said its efforts to oversee new fuel shipments followed visits to Tunisia by Omran Abukraa, recently appointed chairman of state-owned Libyan National Oil Company, and Abdulati Obeidi, Libya’s foreign minister.
A source said SMS Trading was likely operating in co-ordination with Al Sharara, a Libyan company set up by former oil minister Shokri Ghanem that, since the uprising against Qadhafi, has been transformed from a local distribution company into a fuel importer.
The amount of money involved was not disclosed, nor the date of shipment. The letter of credit was issued on 17 June.
Neither Raseel Import & Export nor Alubaf Bank would respond to requests for comment about this article. SMS Trading could not be located.
A source told Petroleum Economist that the companies would try to land a vessel carrying the fuel in Zawiyah – but if Nato, which has already interdicted regime-bound tankers carrying gasoline, prevented the landing it would discharge its fuel in Tunisia for re-export to Qadhafi-controlled Libya.
Desperate for fuel
The document confirms Qadhafi’s desperation to secure fuel shipments as a tightening of the embargo against his regime drains it of gasoline and diesel to support his army’s war effort.
Nato previously prevented one tanker, the Jupiter, from landing in western Libya after Petroleum Economist revealed it was carrying 12,500 tonnes of fuel to the regime. It remains anchored off Tripoli, and has not been able to discharge its cargo.
The EU has also widened its sanctions against the regime to bar vessels from entering six ports under Qadhafi’s control.
A second, larger vessel, the Cartagena, remains anchored offshore Malta. It is carrying 37,500 tonnes of gasoline. In recent weeks, Hannibal Qadhafi, the dictator’s son who controls the state-owned General National Maritime Transport, ordered a crew of Libyan sailors to take over the Cartagena and sail it to Tripoli.
That plan failed after the Indian crew refused to surrender control of the Cartagena.
Floating refinery plans
Petroleum Economist has also learnt that the regime has entered negotiations with a vendor in the Black Sea region to buy a floating refinery. The plant, which could process some crude oil still said to be held in regime-controlled storage tanks, would have maximum capacity of 10,000 barrels a day (b/d), said a source.
The letter of credit from Alubaf would circumvent a problem that has hindered trading with the regime since conflict erupted in February, when the closure of banks prevented credit lines from being issued, leaving traders unsure about payment.
Even in the rebel-held east, payments for fuel shipments have gone through Qatar Petroleum and its subsidiaries, which have agreed to handle the rebels’ petroleum trade.
Zawiyah, which is also home to a 120,000 b/d refinery, has seen fighting in recent weeks as rebels seeking an end to the Qadhafi regime clash with loyalists. The refinery is a source of fuel for Tripoli and the regime’s army.
Last week, it was confirmed that rebels had successfully shut down a pipeline shipping crude from fields in Libya’s southwest to Zawiyah, essentially cutting off the refinery’s feedstock.
It is understood that a valve on the line was switched off and cemented to prevent easy restart.
Western diplomats insist that the fuel embargo and a more intensive military campaign could quickly bring Qadhafi down.
Renewed efforts are also under way to secure a negotiated settlement, although the latest indictment against Qadhafi from the International Criminal Court, issued on 27 June, may have made that harder.
One source said: “He’s been offered jungle, beach, mountain top, chalet, villa – whatever he wants – to leave.” Derek Brower, London