Libya: Dabaiba Scrambles After Explosive UN Report Deems Firm’s Oil Exports Illegal

What happened: GNU Prime Minister Abdulhamid Dabaiba instructed the NOC to suspend its agreement with controversial private company Arkenu, citing concerns over transparency and economic repercussions.

Why it matters: The move follows the drafting of an unpublished UN report that describes Arkenu as a “Trojan horse” to enable armed groups to illicitly export oil — allegations that could blow back on the ruling Dabaiba and Haftar families.

What happens next: The report’s release will spark public backlash and potentially a showdown over Arkenu. This could further strain the already difficult relationship between the eastern and western camps, fraying the country’s delicate status quo and risking a return to conflict.

This week, Government of National Unity (GNU) Prime Minister Abdulhamid Dabaiba instructed the National Oil Corporation (NOC) to suspend its agreement with the controversial private oil firm Arkenu, citing growing concerns over transparency and potential economic repercussions with the risk of a public backlash.

In a letter to NOC Chairman Masoud Suleiman, Dabaiba argued that the deal had prompted widespread criticism and raised questions about the NOC’s ability to ensure fair and transparent management of Libya’s oil resources. He noted that similar contracts had been found to have legal and technical shortcomings, which impacted production rates and deprived the state of significant revenues.

Dabaiba's concerns are ironic since his relative, Ibrahim Dabaiba, was key to the establishment of Arkenu in 2023, and the GNU initially gave the company its official imprimatur. The timing of Dabaiba’s request is also noteworthy as it follows the most recent UN Panel of Experts report, which contains a lengthy and damning section on Arkenu.

The UN Report Names Names

The 288-page report — a copy of which has been obtained by Horizon Engage — has been presented to the UN Security Council but will not be publicly available until later this month.

The report details how Arkenu was established in Benghazi following an agreement between Ibrahim Dabaiba and Khalifa Haftar’s son Saddam, though the latter ultimately took control of it. It outlines how former Deputy Oil Minister Rifaat al-Abbar (see Featured Personality), acting as a proxy for Saddam Haftar, played a central role in establishing and enforcing the contractual relationship between the NOC and Arkenu in contravention of Libyan law and contrary to the Libyan state’s interests.

The UN report accuses Abbar of exercising de facto control over decision-making within the NOC during and after Ferhat Bengdara’s chairmanship by establishing a shadow governance structure, obstructing oversight mechanisms and ensuring compliance through pressure exerted at multiple institutional levels — all to further the interests of Saddam Haftar and his associates.

It also identifies Belqacem Shengeer, a former member of the NOC’s board of directors, as “the technical architect behind the creation of Arkenu.” The report details how he, as the NOC’s representative, was appointed to head a committee intended to serve as the primary forum for the NOC and Arkenu to review contractual obligations and monitor implementation.

The UN Panel accuses Shengeer of directly representing the interests of Saddam Haftar and senior figures in his father’s military, the Libyan Arab Armed Forces (LAAF). In this role, it alleges, Shengeer impeded oversight and prevented the NOC from protecting Libya’s interests. The Panel concludes that Arkenu benefited from the LAAF’s capacity to obstruct any effort by the NOC to safeguard its institutional and financial interests.

Arkenu Accused of Violating Security Council Resolution

The report claims that Arkenu diverted more than $3bn in oil revenues to bank accounts outside Libya, failed to pay taxes due to the state and did not comply with core contractual obligations, particularly investment commitments and limits on authorized export volumes. The Panel details how the Arkenu example inspired armed groups based in western Libya to promote similar contractual arrangements that would allow entities other than the NOC to export petroleum products or natural gas. The authors assert that this practice “opens the door to unchecked control over Libya’s natural resources.”

The report alleges that Arkenu served as a litmus test for similar arrangements to be used as “a Trojan horse” by armed group actors seeking to feign private investment into the oil sector and provide a veneer of legitimacy for the illicit export of oil. This, the Panel says, compelled the NOC to grant companies under the control of these armed group actors access to international oil markets.

The Panel’s report concludes that Arkenu’s exports constitute illicit exports of crude oil from Libya, as prohibited in paragraph 18 of UN Security Council Resolution 2769. This is an extraordinary accusation against a company formed in 2023 with the support of the GNU and the NOC, even if the Haftar and Dabaiba family links that enabled it then have since frayed.

Potential Impacts

Given the current standoff within the Security Council, Arkenu is unlikely to face sanctions as others have in the past. Rather, we believe that the fallout is more likely to be political. UN Panel reports are widely circulated in Libya once public, and the damning account of Arkenu and its activities is likely to spark a public backlash as soon as this report is made public. Dabaiba’s request to the NOC to suspend its agreement with Arkenu is likely an effort to head off such controversy, though we do not expect it will be sufficient.

Public outcry over Arkenu will only hasten a showdown between the Dabaiba and Haftar families over the company’s fate. In our view, the already poor relations between the two houses are likely to deepen as anger over the report’s allegations widens, straining the country’s delicate status quo and raising the risk of a return to conflict.