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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