Libyan militias launched a fierce offensive to capture the country’s key oil ports on Wednesday, with eastern government forces who control the facilities hitting back with air strikes.
Fighting was centred around the coastal town of Ben Jawad, 30 kilometres west of Es Sider, the country’s largest oil port, with social media showing images of columns of smoke rising from bombing raids.
Reports from Libyan media said the eastern government, controlled by the House of Representatives parliament in Tobruk, had bombed the attackers, using Mig 21 jets and attack helicopters to hit advancing columns of militia vehicles. Troops were deployed to protect the perimeters of the ports.
Libya’s state oil company, the National Oil Corporation, which is politically neutral, said it had evacuated non-essential staff from Es Sider but not from the nearby port of Ras Lanuf, and was continuing to load tankers at the two sites.
The fighting is a blow to diplomatic hopes that, with the crushing of ISIL in its main base at Sirte earlier this week, Libya’s fractious militias could unite.
The destruction of ISIL in Sirte, after a six-month battle, appears to have been the signal for some militias in western Libya to resume large scale operations in the country’s civil war.
Libya media reports say the oil ports attack is being led by units connected to the Benghazi Defence Brigades, a militia grouping which in the summer led failed efforts to capture Benghazi from eastern government forces led by Field Marshal Khalifa Haftar.
Both Es Sider and Ras Lanuf, Libya’s largest oil refinery, were captured in September by Field Marshal Haftar’s forces from a militia loyal to the Tripoli-based Government of National Accord (GNA), which is backed by the United Nations and is a rival to the eastern government. The ports are key outlets for Libya’s so-called Oil Crescent, a vast area of oilfields that account for two thirds of the country’s total oil production.
Since Field Mashal Haftar and his fighters captured the ports, oil production has risen from 220,000 barrels a day to about 600,000 barrels per day. This production increase has raised hopes that Libya could earn desperately-needed foreign currency.
The GNA was quick to denounce the attack, releasing a statement saying, “The GNA announces that it has absolutely no connection to the attack that happened on Wednesday.”
The attack came the day after Martin Kobler, chief of the United Nations support mission for Libya, told the UN security council in New York that rising oil production gave Libyans hope of avoiding financial meltdown.
“Oil production has increased significantly, tripling from August, to almost 600,000 barrels per day,” said Mr Kobler. “Libya’s financial reserves have shrunk from 109 billion dollars (Dh400.4bn) in 2013 to near 45 billion dollars. The country will face an economic meltdown unless something changes.”
Both Es Sider and Ras Lanuf were heavily damaged in fighting in both December 2014 and again, in an attack by ISIL, in February this year, and there are fears that further damage will see the ports effectively destroyed, nullifying their value no matter which group ends up controlling them.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia