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Arkenu exported 7.6 million barrels of Libyan oil since

May

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Eastern commander's son has indirect control, U.N. report

says

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National Oil Corp historically Libya's sole crude exporter

By Yousef Saba and Ahmad Ghaddar

DUBAI/LONDON, Feb 17 (Reuters) - A Libyan company linked

to the powerful faction that controls eastern Libya has exported

oil worth at least $600 million since May, marking an end to the

National Oil Corporation's monopoly on exports, according to

shipping records and U.N. experts.

The shipments by the little-known Arkenu Oil Company, which

was set up in 2023, are the first by a private Libyan company

and mean some of the country's oil revenue is likely being

channelled away from the Central Bank of Libya.

Ever since the fall of Muammar Gaddafi in 2011, Libya has

been riven by disputes between armed factions and it is largely

split, with an internationally recognised government based in

Tripoli in the west and a rival administration in the east,

which is controlled by the forces of military commander Khalifa

Haftar.

The disputes have often centred on the distribution of oil

revenue by the central bank in Tripoli. Haftar's forces, which

control most of Libya's oilfields, have periodically shut down

production or exports, most recently in August last year, to

ensure money continues to flow east.

Reuters was unable to determine who owns Arkenu. However, a

U.N. panel of experts said in a Dec. 13 report to the Security

Council that Arkenu was indirectly controlled by Saddam Haftar,

one of Khalifa Haftar's sons.

"This is a striking precedent that reflects the growing

influence of armed actors over the oil sector," said Charles

Cater, director of investigations at The Sentry, an

international investigative and policy group.

Reuters also reviewed more than two dozen documents,

including bills of lading, government decisions and oil company

letters for this article, as well as interviewing diplomatic and

trading sources and Libya experts.

According to its website and LinkedIn profile, Arkenu is

headquartered in Benghazi, a Mediterranean port city in eastern

Libya with an oil terminal under the control of Haftar's forces.

The company was set up in early 2023 by former employees of

the state-owned National Oil Corporation (NOC), according to two

of the sources.

Reuters sent emails with detailed requests for comment to

two addresses on Arkenu's website but did not receive a reply.

Reuters also contacted a spokesman for the Libyan National Army,

which Haftar commands, without receiving a reply.

OPEC MEMBER

Saddam Haftar was appointed chief of staff of the army's

ground forces in May last year, allowing him to affirm control

over its relations with neighbouring countries and its economic

interests, according to the U.N. report.

Arkenu was first connected to oil exports when it was

awarded ownership of a May cargo by the Arabian Gulf Oil Company

(AGOCO), a subsidiary of the NOC, according to a letter dated

July 11 seen by Reuters.

Since then, Arkenu has exported another seven oil cargoes,

taking its total exports between May and December 2024 to 7.6

million barrels, according to shipping records, worth about $600

million, according to average monthly Brent crude prices.

U.S. oil major Exxon Mobil ( XOM ) bought one of the cargoes

destined for Italy on Oct. 28, according to data from LSEG and

Kpler and documents reviewed by Reuters.

A person familiar with the matter said Exxon bought the

cargo from another trader, not directly from Arkenu.

Unipec, the trading arm of the world's largest refiner,

China's state-owned Sinopec, bought at least two more, destined

for Britain and Italy.

Sinopec did not reply to a request for comment. It was not

immediately clear if Sinopec bought the cargoes directly from

Arkenu, or from another trader.

The NOC, AGOCO and the central bank did not reply to

requests for comment. The oil ministry declined to comment.

Libya, currently Africa's second-largest oil producer and a

member of the Organization of the Petroleum Exporting Countries

(OPEC), has been in a state of chaos since Gaddafi's overthrow,

but oil exports had remained under central government control.

The NOC, which has long operated independently and

maintained political neutrality in the volatile country, still

accounts for the bulk of Libyan exports.

It shipped some 264 million barrels of oil worth nearly $21

billion during the same period covering Arkenu's eight

shipments, based on Kpler data and Reuters calucations.

SARIR AND MESSLA FIELDS

Payments for NOC's crude cargoes are typically made in

dollars to the central bank's account at the Libyan Foreign Bank

in New York, before being moved to the Tripoli government's

account with the central bank.

Payments for the Arkenu cargoes, however, were requested to

be made to accounts at Dubai state-linked bank Emirates NBD and

Banque de Commerce et de Placements SA in Geneva, the shipping

documents showed. Reuters was unable to determine whether the

payments were made to those accounts, nor where the money may

have ended up subsequently.

Emirates NBD said it was unable to confirm or deny any

client relationships due to internal policies and regulatory

obligations. Banque de Placement also said it did confirm or

deny any client relationships as a matter of policy.

U.N. experts have said Haftar is backed by Egypt, Russia,

and the United Arab Emirates.

He lived in the U.S. for 20 years until he returned to join

rebels in ousting Gaddafi. In 2014, he launched the Battle of

Benghazi, which has been his stronghold ever since and his

forces hold a tight grip over the east of Libya, where most of

the country's main oilfields are located.

Besides being allowed to export crude, Arkenu was also made

a partner in the major Sarir and Messla oilfields, according to

an NOC letter seen by Reuters dated July 10, during the tenure

of then NOC Chairman Farhat Bengdara, who resigned last month.

The letter did not give details on how the partnership will

work. The two fields are run by NOC's subsidiary AGOCO and

account for most of its output of roughly 300,000 barrels per

day of high quality crude - the same grade Arkenu has been

exporting.

"There seems to be no evidence that Arkenu has actually

performed any services or development work at the Mesla and

Sarir oil fields," said Cater at The Sentry. "As a result,

Arkenu's claims to hundreds of millions of dollars from the NOC,

paid in the form of oil export cargoes, raise serious red flags

for potential corruption."

Arkenu also became a partner with the NOC in developing

three smaller oilfields - Sultan and Latif in Libya's east and

Tahara in the west - according to a 2023 cabinet decision seen

by Reuters dated November 2023.

The U.N. report said members of armed factions had been

appointed to different positions at the NOC itself as part of a

reshuffle that included setting up an office at a different site

responsible for service agreements with private companies.

"Among them was an agreement with the first private oil

company in Libya, Arkenu Oil Company," the U.N. report said.