OGJ Oil Diplomacy Editor
LOS ANGELES, Mar. 10 -- Libyan government forces today drove rebel forces from the oil port of Ras Lanuf even as a senior official acknowledged that the country’s oil production has declined by more than two-thirds amid the fighting.
"We've been defeated. They are shelling and we are running away. That means that they're taking Ras Lanuf," said one rebel fighter as troops and tanks loyal to Libya’s leader Moammar Gadhafi battled the insurgents at the western entrance to the town and used gunboats to fire on the rebels from the sea.
Retaking Ras Lanuf would enable Gadhafi to reassert his power over a badly damaged but vital oil facility, while extending his control farther along the main coastal highway running eastward from the capital, Tripoli, on into rebel territory.
Heavy fighting between rebels and Gadhafi loyalists in the central section of Libya's Mediterranean coast is said to have left a string of key oil pipelines and installations in flames, with blazes reported in Ras Lanuf as well as As-Sidra after air raids and heavy shelling.
"Fortunately, the explosion…was in a small storage supply facility in Sidra…it has not affected the production," said Shukri Ghanem, chairman and chief executive officer of Libya’s National Oil Co.
"It was diesel, it's not crude oil," said Ghanem, who further downplayed the impact of the rebel's capture of the eastern part of Libya, including oil fields and infrastructure, saying, “The whole industry is still working as one” and that “secession is not on our mind.”
Ghanem told journalists in Tripoli, "Of course, the production is down drastically, or it is only 500,000 b/d, down from 1.6 million b/d. The foreign workers went back to their countries, the Libyans to their families, and of course oil production went down and oil exports went down.”
Ghanem said, "We are concerned that the production goes down in an orderly manner rather than damage the installations.” He declined to comment on the potential impact of international sanctions on Libya's key oil revenues.
"We will cross that bridge when we'll reach it," he said.
But German officials suggested that Libya already had reached that bridge, announcing today that their country has joined the US and other European nations in freezing billions of dollars in assets of the Libyan Central Bank.
“The brutal suppression of the Libyan freedom movement can now no longer be financed from funds that are in German banks,” said Germany’s Economy Minister Rainer Bruederle.
Meanwhile, defense ministers of the North Atlantic Treaty Organization were expected to finalize contingency planning and resourcing for the deployment of a no-fly zone over Libya, while not approving its actual deployment.
“NATO is not looking to intervene in Libya but we have asked our military to conduct prudent planning for all eventualities,” Anders Fogh Rasmussen, NATO secretary-general, told Britain’s Sky News.
Although the UK and France have supported a no-fly zone, European officials said there was a growing sense that such intervention could provoke a backlash.
“In the Arab world and elsewhere, this will look like sheer interference and military intervention,” said a senior EU diplomat, indicating any such policy would first require broad support from the UN and the Arab League. “There’s no quick answer to that one.”
The diplomat’s view was reinforced by Russia’s foreign minister Sergei Lavrov who said that discussion of any proposals for a no-fly zone over the north African country were premature and had not yet been put before the UN Security Council, where Russia holds veto power.
Tipping his country’s hand in any Security Council debate, Lavrov warned against meddling in the affairs of Libya and other African countries and said military intervention would be “unacceptable.”
Libya meanwhile is taking no chances and has been attempting to use diplomatic channels to head off the imposition of a no-fly zone.
A Libyan envoy Mar. 10 met with Greece's deputy foreign minister and the ministry's secretary general, a day after similar talks were held with officials in Portugal, Egypt and Malta.
But other EU officials—including defense ministers, foreign ministers, and leaders—are said to have refused similar meetings other Libyan government envoys that have traveled to Europe.
Resistance to a no-fly zone is said to have left Western allies with few options in spite of the ongoing violence. One US official said, “As horrible as this may sound to say, some of these things are processes that have to play themselves out.”
Opposition forces in Libya vowed to continue fighting against Gaddafi, even without a no-fly zone.
"If they implement a no-fly zone we will ask for other things. Even if they do not implement it, we will fight," said Iman Bugaigis, a rebel media, told reporters in Benghazi. "There is no return for us.”
Contact Eric Watkins at email@example.com.