When historians look back at Libya in a few decades’ time, they may well conclude that the shape of the country after the revolution was defined not by lawmakers in Tripoli, constitutional experts or political ideologies, but rather by the hard realities at ports and oil fields hundreds of miles from the seat of government.

Crude oil production in Libya staged a surprisingly quick comeback in the first 18 months after the end of the conflict. In the first half of 2013 it averaged 1.4 million barrels per day (bpd), according to National Oil Corporation (NOC) data, not far off pre-war levels. A total of 225 million barrels of oil were exported, earning the government about $24bn (LD30bn) during the first six months of the year.

Since the revolution, oil exports have generated about 97% of all state revenues and in turn have ensured a degree of stability in the country. Public-sector wages have gone up since 2011, petrol is cheaper than it was under Gaddafi and the government has paid out a series of grants and benefits to put more money into people’s pockets, including those who fought in the war.

Libya might have looked pretty unstable since the revolution, but take away oil revenues and things would almost certainly have looked far worse.

The Tripoli government, through the NOC, has so far been the only body with the ability to sell Libyan oil and gas on the international market, and to collect and spend the proceeds. This power is one reason why it has managed to survive: public-sector workers are still being paid, and hefty state subsidies continue to keep many basic products and services very cheap. Plans to reform the onerous subsidies system have apparently been shelved after being announced earlier in the year.

But if no oil is being pumped and exported, or if a non-government group can control some of the sales, then maintaining that financial life support – and therefore the survival of the current system – starts to look very strained.

The government does not enjoy a monopoly on the use of force, its control of the country’s land and maritime borders is tenuous, and popular dissatisfaction with both the General National Congress (GNC) and the government itself appears to be on the rise. Cut out its main source of funding, and not much remains.

A crunch point is approaching rapidly, with state finances now effectively living on borrowed time. Since the end of July, Libya’s crude exports have been debilitated by an array of sit-ins, strikes, demonstrations and armed seizures of ports that have cut down output to fraction of its earlier levels: on 2 December, for example, the deputy oil minister said production was 244,000 bpd and exports just 130,000 bpd. 

The most crippling shutdowns have been in the centre and east of the country, where export terminals at Es Sider, Ras Lanuf, Zueitina and Tobruq remain out of action. They are being blocked by an Ajdabiya-based group, calling itself the Cyrenaica Political Bureau, which is demanding greater autonomy for eastern Libya and has issued numerous demands in return for returning the ports to state control. 

So far, it has only been able to block the NOC from exporting oil rather than selling the crude itself to an international buyer, despite having announced the formation of a "Libyan Oil and Gas Corp.", based in Tobruq and claiming it was in "talks" with the UN - something the body denies.

This is partly for logistical reasons: the Libyan Navy can theoretically prevent any tankers from loading oil from ports not controlled by NOC. It’s also not clear whether the groups controlling the ports have the ability to pump and transport oil from the fields themselves, which in most cases are hundreds of miles inland. And finally, the murky legalities of buying crude from what is effectively a rebel group would likely discourage all reputable international traders – though less reputable ones could surely be found if the other obstacles were overcome.

In the west, meanwhile, Amazigh protesters have held sit-ins at the Mellitah oil and gas complex to demand greater political and cultural representation for Libya’s minority Berber community. Gas exports from Libya to Italy have been affected in recent weeks, as has fuel supply for power stations, prompting the electricity ministry to warn of nationwide power shortages. 

And in the sparsely-populated south, demonstrators and protesters have been able to sporadically close major sources of oil production – including the Sharara and El Fil oil fields – as they call for greater government investment in the poorer south and south-western areas of the country.

All this, combined with other more localised strikes or shutdowns, has now brought the government close to a full-blown financial crisis. Prime Minister Ali Zeidan said last week that revenues were at 20% of normal levels, and has warned on several occasions that the state will not be able to meet its budget commitments, nor even pay public-sector salaries. It’s hard to know to what extent that threat is  realistic, given that Libya could draw upon billions of dollars in reserves in an emergency, but revenues have clearly dried up for the immediate future.

Various scenarios are now possible.

The Tripoli government could attempt to unblock the central and eastern ports by force, though at the risk of escalating the dispute into armed clashes and potentially causing serious damage to energy infrastructure. But the government has already issued several ultimatums, all of which have come and gone without any action being taken.  Negotiations and ministerial visits seem to have achieved little, while apparent attempts to pay off the group controlling the ports resulted in political scandal and a bribery investigation.

Alternatively it could agree to the pro-federalists demands, which include among other things the relocation of several government ministries to Benghazi. The government has already promised to devolve more power to the east, but the lack of progress is unlikely to make protesters budge.  The NOC is planning to build a major new office complex in Benghazi, but has dragged its feet, while a government decision in June to move the headquarters of Libyan Airlines, the National Investment Company (NIC) and the Libyan Insurance Company (LIC) to Benghazi seems to have resulted in little concrete action so far.

Moreover, of course, caving in publicly to the group’s demands would amount to paying a ransom, encouraging other groups jostling for concessions to be more bold in their tactics.

Instead the Zeidan government could prolong the status quo by taking neither action, distracted by fire-fighting all the other unpredictable mini-crises that continually flare up in Libya and drawing on its reserves as an emergency source of funding. It may even try to issue debt, either locally or internationally, using future oil revenues or other assets as collateral, though that route faces its own hurdles.

In short, it is caught in an unenviable dilemma that risks allowing the oil shutdown to fester, heaping more misery on state finances while also making it harder to take back control of the ports and fields if and when that time came.

At the heart of the crisis are questions about how Libya is to be governed and structured under its new constitution, a document that will need to address an array of sensitive issues that have lain glaringly unresolved since the end of the 2011 conflict.

Not least among them is how oil revenues, which will remain the lifeblood of the Libyan economy for the foreseeable future, are to be collected and distributed. Will people living in oil-rich areas be entitled to more money? Which bodies have the right to sell oil and gas internationally, and where will they be based? Will particular regions be allocated a percentage of oil revenues and be able to spend it how they wish?

By taking action to close down oil or gas facilities, the various regional and minority groups are effectively strengthening their hand ahead of that process, giving themselves leverage to demand greater concessions from the central government. Oil is so critically important to Libya that this leverage is likely to play a major role in deciding, for example, how much power is given to different regions, what role Benghazi plays in the future country, where ministries or major state-owned bodies are located, what political and cultural representative is given to the minority communities, and so on.

Theoretically, debating and drafting the new constitution should provide an opportunity for the kind of inclusive, open national dialogue that has been sorely missing since the revolution. It was meant to be written during the tenure of the General National Congress (GNC), whose term was initially meant to last 15 months and expire in early 2014, but has been delayed in part by disagreements over the formation of the body responsible for drafting the text, and by general gridlock in the national assembly. In turn, that delay is holding back the election of a more permanent government to take over from the GNC, making it likely that the congress will be around for longer than it originally envisaged.

The glacial pace of progress on the political roadmap is being overtaken by reality: long-term, fundamental issues that should be tackled by the new constitution may already have been settled by facts on the ground by the time it is formally debated. 

In the meantime, if the current government loses its only source of income and stops paying salaries or funding subsidies, then the oil crisis might be overshadowed by an even more serious one.