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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



As the oil industry watched OPEC ministers convene in the Angolan capital Luanda on December 22nd, delegates and industry observers alike were relieved to see the reinstated head of Libya’s state-owned National Oil Corporation (NOC), Shukri Ghanem.

Ghanem has been the approachable front man of the North African state’s oil and gas sector for more than a decade, holding the post of acting OPEC secretary-general from 1999 to 2001. And since the lifting of international sanctions in 2003 and the subsequent opening up to international oil companies (IOCs) of Libya’s 43.7 billion barrels – Africa’s largest – of underdeveloped reserves, he has served as an interlocutor between IOCs eager to participate in development of one of the few Middle Eastern sectors open to foreign equity oil ownership and the increasingly resource-nationalistic government leader Muammar Qaddhafi.

Paolo Scaroni, the Chairman of Italy’s Eni – the country’s biggest foreign producer and largest investor in any sector – joked during long negotiations over a revised exploration and production agreement in 2008 that the two men saw more of each other than their wives.

However, in late August, Ghanem suddenly – without any official announcement – resigned the position as chairman of NOC, which he had held since being replaced as prime minister in 2006 by Ali Baghdadi Mahmudi, as part of a reshuffle seen as a victory for the old guard against economic reformists such as himself.

Although the 66-year-old had spoken for some time of his intention to retire, the reason for his departure was widely known to be his frustration with his government’s actions, the final straw being the curtailment of his and NOC’s own power to deal with IOCs and directly influence energy policy-making through the creation of the Supreme Council for Energy Affairs (SCEA) – a body that is dominated by hardliners and is also headed by Mahmudi.

The resignation was greeted with concern by foreign oil companies with Libyan holdings, who correctly interpreted the move as a result of Tripoli’s growing determination to extract greater domestic benefits on oil deals as the crude price reached new peaks, culminating in the $147 a barrel reached in August 2008.

Speaking in early December at a meeting of the Gas Exporting Countries Forum in Doha, two months after his reinstatement, Ghanem was adamant as to where the authority for IOC dealings lay. “It is the NOC that is now responsible for the policy and the practices of the oil industry in Libya,” he told reporters, adding that decisions were not subject to SCEA approval but only to that of the GPC.



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