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Libya kept in the dark

Libya kept in the dark

The reinstatement of National Oil Corporation chairman Shokri Ghanem is a positive sign, but Libya’s increasing oil nationalism is alienating foreign firms and governments, says Trends magazine.

March 3, 2010 10:26 by

Speaking in Doha, Ghanem confirmed no new licensing was planned for a year or more. “Our effort now is to develop what we have, rather than trying to find more new oil,” he said. “When you see the demand in the world is enough to absorb the available or excess capacity, then we will move.”

In light of the results of earlier exploration rounds, Ghanem was making a virtue of necessity – although in early December, America’s Hess Corporation and NOC announced the discovery of 7 trillion cubic feet of gas in the Gulf of Sirte, while BP indicated in October that exploration in its new contract areas will commence in 2010.

Due to the controversy surrounding BP’s deal with Tripoli, state and private sector parties in both countries will be watching the results closely. Alongside the commercial intransigence being displayed by Tripoli, Gaddafi’s controversial behavior internationally has forced states into deciding between turning a blind eye or face exclusion from the country’s hydrocarbons bounty.

The release on compassionate grounds in August by the devolved Scottish government of Abdelbaset Al-Megrahi, the bomber of a America-bound Pan Am airliner over the Scottish town of Lockerbie in 1988, was widely traced back to the signature of a prisoner transfer agreement with the U.K. in 2008, shortly after which Tripoli ratified BP’s biggest-ever single exploration agreement to invest $900 million in the Ghadames and offshore frontier basins.

The ‘blood for oil’ argument disregarded the separation of the U.K. and Scottish legal systems, but pleas to Gaddafi from British Prime Minister Gordon Brown for Al-Megrahi’s return home to be low-key were ignored, as he was welcomed at the airport by cheering crowds – finally provoking Brown, already under attack by America for the decision, to admit being “angry and repulsed” at the festivities. Libya may soon learn that despite Ghanem’s diplomatic skills, there is only so far his political masters can push IOCs or their governments before investment migrates to more stable environments.

- Trends magazine

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