China Poised to Target Europe’s Energy Underbelly via Libya
China appears to be engaging in Debt Trap Diplomacy to influence Libya’s oil production and distribution capabilities.
The continuing war between Ukraine and Russia appears to be having long-term unintended consequences.
One that should receive a bit more attention than it is getting is the impact of Europe’s imports on petroleum products. For example, in the first half of 2024, the European Union accounted for 72.8% of Libya’s total exports, underscoring the regions’s reliance on Libyan crude. This reliance has only increased as Europe seeks alternatives to Russian oil.
The situation in Ukraine and the Russian strategy of using its oil and gas exports to Europe as a tool for its expansive security policy, together with the international sanctions imposed, have led to a reassessment of Libya as an energy player and as an important alternative to fuel supplies coming from Russia. To this effect, Libya has full potential to become a natural and logical answer to European energy demands at a time when they are proving very difficult to meet by means of other more expensive and distant suppliers.
Given this reliance, it appears that China may be targeting Europe’s energy underbelly via its Belt and Road Initiative (BRI). Libya signed onto BRI in 2018, and now the Chinese are preparing to “help” the Northern African nation take advantage of developing its energy resources.
China is now planning to build a $10 billion oil refinery in Tobruk, capable of processing 500,000 barrels per day. The refinery would export refined products directly to European markets, providing Europe with an alternative and stable energy source.
…Chinese strategists have identified Tobruk as a linchpin for addressing Europe’s port capacity constraints. A multi-phase Chinese investment plan envisions Tobruk as a logistics megahub. At its core is a proposed $10 billion oil refinery capable of processing 500,000 barrels per day. The refined products would be exported to European markets, securing an alternative and stable energy source for the continent. If Haftar’s approval is secured, Chinese stakeholders are prepared to invest even more extensively, potentially surpassing $50 billion in total commitments across Libya in the near- to medium-term.
This refinery project is not standalone. Our sources suggest that China envisions Tobruk as an integrated logistics platform that includes fuel storage facilities, transshipment terminals, and supply depots for both maritime and overland transport. The city’s unique geographic location gives it direct access to the Suez Canal, the eastern Mediterranean, and central Africa, creating a web of interlocking trade and supply chains.
The Chinese are not doing this out of the goodness of their hearts. China’s control over a major refinery and port in Libya would give it significant leverage over energy supply chains to Europe.
But China isn’t stopping at oil refineries. Hanzo Motors, a Chinese firm, recently announced it will establish its first car factory in Benghazi.
The [Libyan Chinese] Chamber said this move would make Benghazi Africa’s gateway to Chinese technology.
The Chamber added that the announcement is an exceptional achievement that reflects Libya’s industrial ambition.
It said the project represents a strategic step towards building a developed industry and opening promising prospects for China-Libya partnership in the technology and manufacturing sector.
I sure hope that the Libyans are aware of the Debt Trap Diplomacy inherent in China’s BRI.
Countries in AP’s analysis had as much as 50% of their foreign loans from China and most were devoting more than a third of government revenue to paying off foreign debt. Two of them, Zambia and Sri Lanka, have already gone into default, unable to make even interest payments on loans financing the construction of ports, mines, and power plants.
In Pakistan, millions of textile workers have been laid off because the country has too much foreign debt and can’t afford to keep the electricity on and machines running.
In Kenya, the government has held back paychecks to thousands of civil service workers to save cash to pay foreign loans. The president’s chief economic adviser tweeted last month, “Salaries or default? Take your pick.”
China is always going to be “China First.” Perhaps both Europe and Libya should start considering more “locally sourced” policies.
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Comments
“ The Chinese are not doing this out of the goodness of their hearts…”
Ya think?
They’re communists, for goodness sake!
Look, if the EU is stupid enough to eschew developing their own resources (oil and beyond) in lieu of sourcing them from China then that’s on them. I want no part of “American Expeditionary Forces III – Bloody Boogaloo”
And seriously, who cares anything about Libya? Maybe Hillary Clinton?
Let’s continue getting our own house in order, shall we? Let’s also not forget that if we get our national priorities and policies in alignment, we can easily out produce any of these nations.
This.
To paraphrase George Herbert, “Living well is the best defense.”
Shame that it isn’t America building these types of things. That’s the kind of foreign involvement I could get behind.
It appears that Europe will end up Muslim, and then China can bleed them.
More tragically, Great Britain and Ireland are shuffling in that same direction. I shudder to think of seeing Westminster Abbey and Notre Dame Cathedral repulsively converted into mosques.
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It’s difficult to find decent reporting on Libya. Last I read Field Marshal Khalifa Haftar’s organization controlled the east (Benghazi, Tobruk) and central (Sirte) regions, while a different group controlled the west (Tripoli). They had a low-level but blood civil war; Haftar had covert Iranian, Chinese, and Russian support and the Tripoli faction had the Turks.
Per the article: “Libya’s fractured governance deters Western investment and engagement. The United States has prioritized counterterrorism and migration control over state-building in Libya, while the EU remains divided over the best approach. The absence of cohesive Western policy has opened the door to alternative actors—including Russia, Turkey, and increasingly, China.”
So the Chinese, sneaky as ever, have a plan and we don’t. Perhaps when the dust settles (literally) in Iran, Mr. Trump can figure out how to respond in Libya. It’s going to become important.
What happens in default?
It’s not like China gets to foreclose on a country. It’s like lending your broke friend money… good luck with that!
So what happens when they don’t get paid?
The Chinese didn’t foreclose on all of Sri Lanka.
They just took the port they had built at Hambantota.
*******
I’m posting this from my laptop. A while ago I attempted something similar from my iPhone. Then nothing happened when I hit Submit. In general, my access to this site from my phone has degraded considerably.
Anyone else having comparable problems?
90% of Iran’s oil exports currently go to China.
The CCP needs an insurance policy.
When it is up and running, how much of the refined petroleum products from Tobruk will be going to Europe?
There is another alternative to Libyan or Russian oil/gas and that is Israel which I think is partnered with one of Cyprus’s. The linchpins though are Turkey which wants to claim part of the field and the US which doesn’t want a pipeline built or so I read What else is new.
As for China, maybe MacArthur was right and we should have nuked them over Korea when we had a real chance to nip that country in the bud. China is a real problem on almost every dimension and the fact that most Americans and most politicians of both parties don’t recognize that is disheartening.
America’s potentially fatal strategic mistake was to think that a Communist China could ever be a friend and trustworthy partner. The CCP knows it is the world’s last, best hope for 20th century totalitarianism, and is acting very intelligently to do what it can to keep the dreams of Marx, Lenin, Stalin, Mao, and the recently discovered Hitler alive.
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