Oil
Wednesday, 30 November 2011 09:19

Unseemly scrabble for Libya’s post-Gaddafi oil assets underway

Written by John Daly

While NATO members, led by France, piously proclaimed at the onset of their military offensive in Libya that their concerns were solely humanitarian, a covert tussle to gain a commanding lead in developing the country’s energy riches in light of Colonel Gaddafi’s departure is well underway.

The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, 25% of the gross domestic product and 80% of government revenue.

Prior to the outbreak of conflict, Libya was exporting about 1,3-1,4-million barrels per day from production estimated at roughly 1,79-million barrels per day, of which approximately 280 000 barrels per day were indigenously consumed. But analysts believe that with reconstruction Libya could soon be exporting 1,6-million barrels per day of high-quality, light crude.

But current production is the proverbial mere drop in the bucket. Libya has the largest proven oil reserves in Africa with 42-billion barrels of oil and over 1,3-trillion cubic metres of natural gas. Causing oil company executives from Houston to Beijing to drool on their Gucci loafers, only 25% of Libya’s territory has been explored to date for hydrocarbons.

Libya is already Europe’s single-largest oil supplier, the second-largest oil producer in Africa and the continent’s fourth-largest natural gas supplier and already dominates the Southern Mediterranean’s petroleum sector. According to the Libyan National Oil Corporation (NOC), more than 50 international oil companies are already present in the Libyan market.

So, peering into Libya’s future, who’s actually ahead?

Apparently it is France.

On 3 April a letter was allegedly sent by Libya’s National Transitional Council (NTC) to a coalition partner, Qatari Emir Sheikh Hamad bin Khalifa Al Thani, which mentioned that France would take “35% of crude oil – in exchange for its total and permanent support” of the NTC. France’s Liberation daily reported on Thursday that it had a copy of the letter, which stated that the NTC’s Information Minister, Mahmoud Shammam, would negotiate the deal with France. In 2010 France was the second purchaser of Libyan oil after Italy, with over 15% of its “black gold” imported from Tripoli.

Zut alors!

The leader of the National Transitional Council, Moustapha Abdel Jalil, recently reported that the States would be rewarded “according to support” given to the insurgents.

While NTC head Mustafa Abdel Jalil has not hidden the fact that the NTC would assign a higher priority for reconstruction and the allocation of oil contracts to countries that supported their uprising, remarking that nations would be rewarded “according to the support” given to the insurgents, the NTC’s UK representative, Guma al-Gamaty, said: “Future oil contracts would be granted on the basis of merit, not patronage. The contracts will be concluded in a transparent manner.”

French Foreign Minister Alain Juppe solemnly denied any knowledge of a formal or specific deal during a radio interview, but brightly added that it would be logical for countries like France, which helped the NTC in its struggle against Gaddafi, to take part in reconstruction.

French President Nicholas Sarkozy was the major European advocate for armed intervention in Libya and his administration was the first to officially recognize the NTC as “the sole, legitimate representative of the Libyan people” and the country’s sole governmental authority, as well as lobbying with other nations to recognize the NTC.

Seeking a share of la gloire, France was also the first state to commence attacks against Gaddafi’s armed forces in Benghazi on 19 March, and along with fellow NATO member Britain have since provided the majority of the military equipment and personnel used during NATO’s operations in Libya. Going into grey areas of international law in its eagerness to oust Gaddafi, France also supplied some weaponry to opposition forces in Libya, a move that came under harsh criticism because of the total arms embargo imposed by the UN Security Council on arms deliveries to any side in the conflict.

The NTC’s Paris-based envoy, Mansour Sayf al-Nasr, denied that such a letter had been sent or that any pledge had been given. But no one was backpedalling more furiously than Information Minister Shammam, who intoned that such an arrangement was unthinkable.

“It’s a joke. It’s false,” Shammam said.

Well, if you cannot believe an information minister, who can you trust? Is it sleazy journalists? It will certainly be interesting to see how the issue plays out in the days ahead, and if France does indeed get its 35% cut of the loot, which at present production rates would average about 500 000 barrels per day.

Full acknowledgement and thanks are given to Oilprice.com for the article. Oilprice.com is a web based information hub that will keep you up to date on the latest news in the oil industry. Visit the website for specialised and specific information on relevant topics in the oil market.

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