The National Oil Corporation (NOC; ) is the national oil company of Libya. It dominates Libya's oil industry, along with a number of smaller subsidiaries, which combined account for the vast majority of the country's oil output.[Hargreaves, Steve (October 25, 2011) Libya oil eyed by Western companies. Retrieved from CNN website on Oct., 25, 2011 from http://money.cnn.com/2011/10/25/news/international/libya_oil/index.htm ] It is led by Farhat Bengdara, appointed in July 2022. Of NOC's subsidiaries, the largest oil producer is the Waha Oil Company (WOC), followed by the Arabian Gulf Oil Company (Agoco), Zueitina Oil Company (ZOC), and Sirte Oil Company (SOC).EIA 2007
Libyan oil sector: overview Libya is a member of the Organization of Petroleum Exporting Countries (OPEC) and holds the largest proven oil reserves in Africa (followed by Nigeria and Algeria), as of January 2007, up from in 2006. About 80% of Libya's proven oil reserves are located in the Sirte Basin Province, which accounts for 90% of the country's oil output. The province ranks 13th among the world's petroleum provinces, having known reserves of of oil equivalent (367,00 of oil, of gas, of natural gas liquids).T. Ahlbrandt (2001) p.1 The government dominates Libya's economy through control of oil resources, which account for approximately 95% of export earnings, 75% of government receipts, and over 50% of GDP, which was US$50.2 billion in 2006.World Bank (2006)
History
Early years Libya has attracted hydrocarbon exploration since 1956, when the first wildcat oil well was drilled onshore in the Sirte Basin. Libya granted multiple concessions to Esso, Mobil, ENI, Texas Gulf, and others, resulting in major oil discoveries by 1959.T. Ahlbrandt (2001) p.7 In 1969, the Idrissid monarchy was overthrown in a bloodless coup led by Muammar Gaddafi. He eventually elaborated a new theory of the state in which all productive units and workplaces were to be directly governed by popular congresses. As part of his vision, the National Oil Corporation was established on 12 November 1970. The company's first chairman was Salem Mohammed Amesh, who was later replaced by Omar Muntasir.Omar Muntasir served as NOC Chairman until 1980 Under its articles of incorporation, NOC was legally restricted to Production sharing agreements (PSA) with international oil companies (IOCs) where the latter assumed all risks associated with exploration. In July 1970, further legislation made NOC responsible for marketing all domestic oil products.
Nationalization and the Arab oil embargo
In the 1970s Libya initiated a socialist style nationalization program under which the government either nationalized oil companies or became a participant in their concessions, production and transportation facilities.Library of Congress, 1987 As part of this program, NOC signed production-sharing agreements with Occidental Petroleum, Sincat (Italy), and formed a joint drilling company with Saipem (an Eni subsidiary). This was accompanied by nationalization of ConocoPhillips's Umm Farud field in 1970, British Petroleum's Sarir field in 1971 and Amoco's Sahabir field in 1976. After commencement of the 1973 Arab-Israeli War, Saudi Arabia, Libya, and other Arab states proclaimed an embargo on oil exports to countries that supported Israel, primarily the United States. Additionally, the NOC had encountered legal actions by BP over claims of ownership. Although the 1973 oil crisis increased global demand, BP's legal position made some countries wary of importing from Libya. NOC compensated for this weakness by arranging barter deals with France and Argentina. On March 18, 1974, the Arab oil ministers ended the US-embargo, with Libya being the sole exception. During 1974, agreements reached with Exxon, Mobil, Elf Aquitaine and Agip provided production-sharing on an 85-15 basis onshore, 81-19 offshore. Eventually, all the foreign companies (excluding BP) agreed to partial nationalization, providing Libya with a substantial oil surplus. However, declining world oil prices resulted in NOC selling back its production shares. Other concessions that were nationalized that year included those belonging to BP, Amoseas (Beida field), Hunt, Arco, Esso and Shell's 17 percent share in the Oasis Oil Company. Mobil-Gelsenberg was owned by the NOC (51%), Mobil (32%), and Gelsenberg (17%).Gelsenberg was a West German refining & marketing company pd.
U.S. sanctions The last phase of the socialist period was characterized by an intensive effort to build industrial capacity, but falling world oil prices in the early 1980s dramatically reduced government revenues and caused a serious decline in Libya's advantage in terms of energy costs.World Bank (2002) p.7 More importantly, accusations of terrorism and Libya's growing friendship with the Soviet Union led to increased tensions with the West. On 10 March 1982, the U.S. prohibited imports of Libyan crude oil. Exxon and Mobil left their Libyan operations by January 1983. In March 1984, controls were expanded to prohibit exports to the Ras al-Enf petrochemical complex.
President Ronald Reagan imposed sanctions on 7 January 1986 under the International Emergency Economic Powers Act, prohibiting US companies from any trade or financial dealings with Libya, while freezing Libyan assets in the US. On 30 June 1986, the US Treasury Department forced remaining US oil companies to leave Libya but allowed them to negotiate standstill agreements, retaining ownership for three years while allowing NOC to operate the fields. As a result, Amerada Hess, Conoco, Grace Petroleum, Marathon, and Occidental left a production entitlement that was generating . Negotiations with NOC and US oil companies over assets dominated much of the late 1980s.
Libya responded by concluding its third Exploration and Production Sharing Arrangements (EPSA-III) in 1988, including agreements with Rompetrol, the Romanian Oil Company, Royal Dutch Shell, Montedison, International Petroleum Corporation of Canada, INA-Naftaplin, OMV, Braspetro and Husky Oil. The agreements included expenditure guarantees by the Libyan government, an important departure from earlier regulations, designed to help offset sanctions.
U.N. sanctions and afterward Libya's isolation became even more pronounced following the 1992 imposition of United Nations sanctions designed to force Gaddafi to hand over two suspects indicted for the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland. The sanctions, imposed on 31 March 1992, initially banned sales of equipment for refining and transporting oil, but excluded oil production equipment. Sanctions were expanded on 11 November 1993, to include a freeze on Libya's overseas assets, excluding revenue from oil, natural gas, or agricultural products. Under these condition, NOC Chairman Abdallah al-Badri emphasized reducing new projects and upgrading domestic facilities. Joint ventures were initiated with Veba, Petrofina, North African Petroleum, the Petroleum Development Co. (Republic of Korea) and Lasmo. Foreign operators were encouraged to produce exclusively for export, limited to national oil companies with pre-sanctions equity in Libya. This policy was an attempt to contain the amount of crude offered on the spot market through third-party traders, and increase downstream investment. In 2000, NOC was reorganized by the General People's Congress after the Ministry of Energy was abolished, further consolidating control over the sector.
Although U.N. sanctions were suspended in 1999, foreign investment was curtailed due to the U.S. Iran and Libya Sanctions Act (ILSA), which capped the annual amount foreign companies can invest in Libya at $20 million (lowered from $40 million in 2001). On 14 August 2003, Libya agreed to compensate families of the 1988 bombing with $2.7 billion, to be released in three tranches; the first following a lifting of UN sanctions, the second after lifting of US sanctions, and the third after Libya is removed from the U.S. State Department's state sponsors of terrorism list. On 22 December 2003, Libya announced it would abandon WMD programs and comply with the Nuclear Non-Proliferation Treaty. The US welcomed the move, but said it would maintain economic sanctions until it saw evidence of compliance. On 4 June 2004, US Assistant Secretary of Commerce William H. Lash announced that Libya had sent its first shipment of crude oil to the US since resumption of ties between the two countries. In May 2006, the U.S. officially removed Libya from its list of states that sponsor terrorism and normalized ties and removed sanctions.
Libyan civil war and transition During the 2011 Libyan civil war, Oil Minister Shukri Ghanem defected and fled to Tunisia. In September 2011, the National Transitional Council named Nuri Berruien as chairman of the NOC during the transitional period. After a period when NOC was split between rival governments in eastern and western Libya, leaders in July 2016 reached an agreement to reunify the company's management. However, on 2 July 2018 they quarreled again.
Operations
On 30 January 2005, Libya held its first round of oil and natural gas exploration leases since the US ended sanctions: 15 areas were offered for auctions. In October 2005, a second bidding round was held under EPSA IV, with 51 companies taking part and nearly $500 million worth of new investment flowing into the country as a result. In December 2006, Libya held its third bidding round; however, PSAs were still being signed by NOC as of April 2007.
Libya has substantial potential for exploration with an average of 16 wells per 10,000-km, whereas similar countries usually average 50 (the world average is 105).Intsok Onshore Market Report 2006
In November 2016, the group chairman, Mustafa Sanalla, announced the group is seeking to boost output to 900,000 barrels a day by the end of 2016 and about 1.1 million barrels next year.
Upstream activities Oil and gas E&P is carried out by NOC subsidiaries and IOCs licensed by special participation and PSAs. These activities cover wide areas, both onshore and offshore, through Libya's territorial waters and continental shelf. NOC has a network of onshore oil, gas and product pipelines, crude oil export facilities and a gas pipeline. The Western Libyan Gas Project (WLGP) is a 50-50 joint venture between NOC and Eni, which came online in October 2004. Since then, WLGP has expanded to Italy and beyond. Currently, per year of natural gas is exported from a processing facility at Melitah, on the Libyan coast, via Greenstream to southeastern Sicily. From Sicily, it flows to the Italian mainland, and then to the rest of Europe. In 2005, additional gas was supplied to the Greenstream pipeline from the Bahr Essalam Field, located in offshore Block NC-41.U.S. Securities and Exchange Commission, 2005, p. 21 Development of the Bahr Essalam, Wafa and Bouri Fields, which are part of WLGP, and the natural gas export pipeline represented a shift in Libyan emphasis from oilfield development to a mix of natural gas and oilfield projects. Previously, natural gas exports were limited to LNG.P. Mobbs (2004) p. 19
NOC hopes to increase total oil production from 1.80 mmbd in 2006 to 2 mmbd by 2008. Foreign direct investment into the oil sector is likely, which is attractive due to its low cost of oil recovery, high oil quality, and proximity to European markets.International Crude Oil Market Handbook
Field development and exploration