Libya's oil-rich east bids for power

Wed Oct 5, 2011 11:36am EDT
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By Emma Farge

BENGHAZI, Libya (Reuters) - Libya's eastern city of Benghazi would risk fading back into obscurity after a six-month interlude as the seat of the rebel government were it not for one powerful asset: oil.

Benghazi residents are struggling to convert their wartime sacrifices into economic clout to restore the status of a city once deemed on a par with the capital, Tripoli, and rescue it from its relative obscurity in the Muammar Gaddafi era.

Under Gaddafi, Benghazi was at the mercy of Tripoli for its share of state funding, even though most of this is generated from nearby eastern oil fields. Libya's economy is almost entirely reliant on oil and gas revenue.

Cradle of the anti-Gaddafi revolt, Benghazi had languished low on the deposed ruler's list of spending priorities, which many see as punishment for a tradition of eastern resistance to his 42 years of one-man rule -- and to Tripoli's dominance.

"There's a feeling of entitlement in Benghazi and they want rewards. They held the fort for six months and this came on the back of a period of repression," said a Libyan oil industry source in the city where the interim National Transitional Council (NTC) set up its headquarters early in the revolt.

Youssef Mahmoud, an engineer at Jowef Oil, a subsidiary of the state National Oil Corporation (NOC), typifies the sort of grassroots resource regionalism that has the potential to shake up the North African country's bedrock industry.

He heads a group of about 4,000 state oil workers called the February 17 Oil Committee, and is lobbying Libya's interim rulers for a "greater say in oil policy" that would be symbolized by moving NOC headquarters from Tripoli to Benghazi.

"Gaddafi took it (the NOC) to Tripoli because he wanted control. But where are the fields?" complained Mahmoud, jabbing his finger at a map of Libya, showing a large clump of black circles representing oil fields in the eastern Sirte Basin.   Continued...

<p>A man fishes near the port of Benghazi September 9, 2011. REUTERS/Asmaa Waguih</p>