Montag, 23. Januar 2012

Oil Industry in Libya

Zawiyah, January 2012: The refinery is up and running again. Providing at least part of the petrol and diesel needed in Libya. The rest is imported. Plans for expanding existing refinery capacities, like the huge project in Ras Lanuf, are put on hold.
But what is going on in the oil industry? I read a lot of comments and articles that the west and NATO have only come to Libya in order to get their oil afterwards. Sorry guys, but this is simply WRONG. Libya under Gadaffi did sell its oil already to the West. Without any conditions. It was very easy: The 1,6 million barrels per day were shipped mostly to European countries, and they paid well for it (world market price).
Of course, there were many IOCs (International Oil Companies) doing the exploration in Libya. At the end of 2010 there were about 50 of them around. The National Oil Company under its Chairman Shukri Ghanem started at the beginning of the 21st century to re-negotiate existing contracts and tendering new licenses. All this was being done under the so called EPSA IV contracts (Exploration and Production Sharing Agreement). A typically EPSA IV contract would leave the IOC with no more than 20% of all profits. With more and more companies pushing to enter the market, the share attributed to the IOCs became smaller and smaller. This led to the fact, that some auctions did not bring the big masses in foreign companies tendering, as prices went very high. Some companies even had to shut down their Libya operations (like Woodside/ AUS), or sell it (like Verenex / CAN) because of stiff competition and more profit being taken by the Libyan government.
All current production is performed under old contracts. No new contract has been awarded so far, and I also don´t expect this government to do any such action. This means that for the 1 mio - 1,2 mio barrel that are currently produced in Libya, the big share of income goes to the Libyan governemnt.
And hence in future hopefully to the Libyan people.

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