* Eastern LNA has been unable to defend ground positions
* Battle risks strengthening hardliners on both sides
* Output from key oil ports threatened (Adds updated oil production figure)
By Aidan Lewis and Ayman al-Warfalli
TUNIS/BENGHAZI, Libya, March 10 (Reuters) - Early in the morning, small groups of armed pick-up trucks raced across the desert towards some of Libya’s biggest oil export terminals.
A previous attempt by the Benghazi Defence Brigades (BDB) to capture the ports had failed. But the attack last Friday caught the eastern-based Libyan National Army (LNA) by surprise.
The LNA’s withdrawal from the ports of Es Sider and Ras Lanuf has dented its claims to military superiority, dimming the prospects for its leader, Khalifa Haftar, to expand his power.
It also opens up a new front between factions battling on and off for power in Libya since 2014, throwing efforts to unite the country and rebuild oil production into deep uncertainty. The North African state is exempt from a recent OPEC deal to limit global supply, and had more than doubled its output in recent months to about 700,000 barrels per day (bpd).
The LNA says it is mobilising for a counter attack, personally overseen by Haftar, against the BDB, the most recent armed faction to contest ports that should account for more than half of the OPEC member’s exports.
The BDB says it is seeking a route to Benghazi, from where many of its members had fled in the face of LNA advances against Islamists and other opponents over the past two years.
It says it is fighting for families trapped or displaced by the LNA’s military campaign, and to save Libya from a return to dictatorship and protect the revolution that toppled Muammar Gaddafi in 2011.
“Our main goal is to retake our city, we reject injustice and military rule,” BDB commander Mustafa al-Sharksi told reporters. “When we rallied against Gaddafi, we wanted freedom, we wanted to build legitimate institutions, and leaders who would rule the country as those in the developed world do.”
Haftar, a former Gaddafi ally who casts himself as the man to save Libya from the chaos of militia rule, received a big boost in September when he took over Es Sider and Ras Lanuf, as well as Brega and Zueitina, two other terminals on the a strip of coast southwest of Benghazi known as the Oil Crescent.
Peeling away tribal support, Haftar ousted Ibrahim Jathran, a commander of Libya’s Petroleum Facilities Guard (PFG) who had become unpopular for demanding money to end a port blockade.
The National Oil Corporation (NOC) in Tripoli was quickly invited to reopen the ports, and Libya’s production more than doubled to 600,000 bpd.
The BDB has also said it will allow the NOC to operate freely, inviting in a PFG head appointed by the U.N.-backed Government of National Accord (GNA) in Tripoli.
Because Es Sider and Ras Lanuf were badly damaged in previous fighting and are operating at far lower levels than Zueitina and Brega, the initial impact on production has been limited. Total output stood at about 620,000 bpd on Thursday, NOC Chairman Mustafa Sanalla told Reuters.
But the BDB advance has put oil back at the centre of conflict and ambitious NOC plans to revive production may be stalled. The NOC had said it hoped to push output to more than 1 million bpd within months, on the way to pre-conflict output of 1.6 million bpd.
It will now require “pretty adroit footwork” by the NOC to sustain such a message, said John Hamilton, a director of Cross Border Information and an expert on Libyan energy.
“What this demonstrates is that Haftar is not able to provide security for the terminals,” he said. “How can any ship owners or insurers or oil companies be confident of sending vessels to lift crude, even if Haftar regains them?”
After taking the ports seven months ago, the LNA repelled several attempted counter-attacks with air strikes, and carried out what it said were preemptive strikes against BDB mobilisation in the central desert region of Jufra.
Guards loyal to the LNA said the ports were well secured, and safe for foreign workers to return.
But when the BDB advanced again last Friday, LNA defences were quickly breached. LNA ground forces retreated towards Brega, about 115 km (70 miles) east of Ras Lanuf, and lost more than 30 men, according to medical sources.
There have been daily LNA strikes since, but their impact is unclear.
Sharksi said the BDB had air defence weaponry, claiming LNA pilots “are scared so they fly at high altitudes”.
Fawzi Boukatef, a rebel leader in Benghazi in 2011 who is in contact with the BDB, said tribal support for Haftar, uncertain in parts of the east, had eroded in the Oil Crescent, and that mercenaries from southern Libya and sub-Saharan Africa who had been operating for the LNA had been bought off.
“Some were paid to leave the area and some were paid to fight on the other side,” he told Reuters.
The BDB, dismissed as al Qaeda-linked militants by the LNA, in fact have a wide support base, said Anas El Gomati, head of the Sadeq Institute, a Libyan think tank. They are motivated by the desire to get thousands of displaced families back to Benghazi, help those caught in a long siege in the district of Ganfouda, and by recent LNA air strikes in the desert.
“The attacks in Jufra certainly galvanized support for the BDB and created a rallying call against Haftar,” he said.
Some BDB support comes from Misrata, the western port city that has been a source of military opposition to Haftar and where many displaced families from Benghazi have been living.
Though moderates in Misrata supported a U.N.-backed Government of National Accord (GNA) in Tripoli and have even been open to a deal with Haftar, fighting in the Oil Crescent risks strengthening hardliners on both sides, analysts say.
Haftar has shunned efforts to revive the U.N. peace process, while accusing elements within the GNA of supporting the BDB. A group of nearly 40 pro-Haftar members of Libya’s eastern parliament voted this week to drop support from the GNA’s leadership and withdraw from U.N.-mediated dialogue.
“From where we’re sitting today, a deal looks highly unlikely,” said Gomati. (Writing by Aidan Lewis; Editing by Mark Potter)