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 around 70% the country's oil output. 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).
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). 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.
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. 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. 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. 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%). 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. 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.