Libya: Who Gets The Oil?

• December 29th, 2011
• Posted by EUEditor

When the leaders of two NATO countries engaged in the Libyan campaign went to Libya after the death of Muammar al-Gaddafi (picture), speculation arose as to whether they’d be receiving rewards.

Writer – Daniel Roche

The French President Nicolas Sarkozy and British Prime Minister David Cameron had spearheaded European support for the air campaign that helped remove Gaddafi; and so were under scrutiny, as to how well they might do out of any oil bounty from the winners.

In September the French daily newspaper, Liberation, published what it said was a letter from Libyan rebels to the emir of Qatar.

In it, Liberation reported, the “Popular Front for the Liberation of Libya” tells the Emir that it had struck a deal “to assign 35% of crude oil to France in exchange for its total and permanent support of our Council”.

The Libyan ruling Council’s Ambassador in Paris, Mansur Seif al-Nasr, told  Liberation he had never heard of the “Popular Front” that apparently issued the letter, and added: “All documents, all valid treaties are signed by the National Transitional Council.”

Both the French and Libyan interim governments have denied knowledge of the group’s existence but, Alain Juppé, the French Foreign Minister, also said he thought it was “fair and logical” for countries that supported the revolt to be rewarded.

Samuel Ciszuk, a Middle East energy analyst with the consultancy IHS Global Insight, believes that the letter may have been forged by the Gaddafi regime as a way to discredit the rebels, and that promising that much oil to a single country would not make sense.

“The new government clearly wants to get the oil industry back up and running as quickly as possible, and they know that can be best done with the help of the foreign companies that previously operated them”, he says.

“Anything that led to further delays in production – and financial income – would not be welcome.”

Libya is reliant on oil for about 80% of its GDP, exporting around 1.3 million barrels of oil per day before the conflict.

The British newspaper the Guardian was told that the oil company, BP had been holding private talks with Libya’s interim Government.

BP had already committed to spending more than A$1billion on exploration plans under the Gaddafi regime and was just about to drill its first exploratory well before the civil war broke out. It currently has no producing assets in Libya.

Currently the Italian company ENI has the dominant position, producing 273 000 barrels of oil a day. France’s Total was the operator of al-Jurf field in the Mediterranean, which has not been touched by war and Shell has been employed to try to upgrade an ageing liquefied natural gas terminal.

Chinese and Russian countries could face political difficulties after being slow to support the rebels.

Abdeljalil Mayouf, an executive at Agoco, the oil firm controlled by the Libyan rebel groups, now coming into power, told Reuters: “We don’t have a problem with western countries like the Italians, French and UK companies. But we may have some political issues with Russia, China and Brazil.”

The government of Turkey was also slow to back the rebels and the Turkish Prime Minister flew into Tripoli, Libya’s capital, soon after then fighting subsided. Turkey was reported to have had A$15 billion in contracts prior to the civil war.

Libya’s interim government has denied making any firm deals.

“We have not signed any contracts or agreements, but as a grateful Muslim nation we will appreciate these efforts and they will have priority, but in a transparent manner,” said Mustafa Abdel Jalil, Libya’s interim head of government, at a media conference.

Mr Cameron was for the moment focusing his discussion on the liberation of the Libyan public.

“I think it’s very important to be here.

“Britain played a role which I am very proud of, but in the end this is what the Libyans did themselves,” said Cameron.

President Sarkozy followed suit.

“All the dictators in the world have to understand that in the 21st Century they will find no haven that can provide them with impunity”, he said.

NATO’s governing body, the North Atlantic Council, decided not long after Colonel Gaddafi was killed, to discontinue its naval and air operations over Libya.

That was against appeals for it to stay a while longer, Mustafa Abdel Jalil, as the head of the ruling Council, calling for the alliance to continue its operations for at least two more months.

“We, the Libyan people, wish that the alliance will continue its operations to at least the end of the year”, he said at a meeting of NATO and Arab Defense leaders in Doha, Qatar.

Fears that without the presence of the North Atlantic alliance, violence would continue in Libya, have subsided in the last month.

Questions about who might get preferential access to buy oil, and perhaps reap a bonanza, are still out and about.

See EUAustralia Online: “Death of Gaddafi”, 21.10.11; “Libya: Keeping up the pressure”, 7.9.11; “Libya denouement”, 25.8.11; “NATO backs rebel push on Tripoli”, 22.8.11; “Libyan action consolidated under NATO”, 28.3.11; “NATO ready on Libya …”, 11.3.11.

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