Libya’s National Oil Corporation (NOC) and the Ministry of Oil and Gas announced last month that 37 companies, including supermajors, have qualified for the first oil and gas exploration licensing round since 2007.
Libya’s National Oil Corporation (NOC) and the Ministry of Oil and Gas announced last month that 37 companies, including supermajors, have qualified for the first oil and gas exploration licensing round since 2007.
The bidding round includes 11 onshore and 11 offshore blocks across established high-potential basins such as Sirte, Murzuq, and Ghadames, as well as unexplored acreage in the Mediterranean. An updated production-sharing agreement is being crafted to make international participation more inviting.
This is a remarkable development for a country that has descended into unresolved divisions on occasion spilling over into civil war following the overthrow in 2011 of the notorious, autocratic regime of Col Muammar Gaddafi after 42 years in power.
A member of OPEC, the country ranks tenth in world oil reserves of 48.36 billion barrels (OPEC figures), and is Africa’s most prolific oil producer after Nigeria but, in different circumstances, would be the dominant one. The International Energy Agency reported that in June Libya was producing 1.22 million barrels per day (bpd) compared with Nigeria’s 1.43 million bpd.
Amidst decades of turbulence, the extraordinary fact is that ever since oil was discovered in the 1950s, Libya has managed to maintain more or less uninterrupted output, always with some participation by western oil companies, mainly under the auspices of its quasi-independent National Oil Company (NOC).
The declared aim of the new licensing round is to increase Libya’s output to 2 million barrels per day by 2028. Whether the round will be completed is a moot point. The marriage between oil and politics has rarely been harmonious.
First serious mention of oil arose in a report in 1938 by Ardito Desai, an Italian geographer, mountaineer and global explorer extraordinaire who died at the age of 104 in 2001. At that time Libya was ruled by Benito Mussolini’s Italian fascist government. In the earlier so-called scramble for Africa by the Western powers, Italy pursued colonial ambitions including invasions of Eritrea, Somalia and Ethiopia as well as Libya. In 1911 Italy had declared war on the failing Ottoman Empire and succeeded in sequestering Libya, then made up of the provinces of Tripolitania and Cyrenaica.
Italian occupation met with prolonged resistance especially from the Cyrenaica region orchestrated for 20 years until his capture and execution in 1931 by Omar al-Mukhtar, leader of the Senussi Order. His heroics are captured in the 1981 big budget, box office flop The Lion of the Desert funded by Gadaffi with Anthony Quinn in the title role and Oliver Reed as Rudolfo Graziano, the Italian general who eventually captured al-Mukhtar. The film was banned in Italy and not finally shown until 2009.
Once in power (1922) Mussolini visualised Libya as a ‘fourth shore’ sanctioning a brutal ‘pacification programme’ including concentration camps and the death of thousands (see prize winning Genocide in Libya: Shar, a Hidden Colonial History, 2021, by Ali Abdullatif Ahmida, professor of political science at the University of New England).
Outbreak of the Second World War caused Libya to become embroiled in the Western Desert campaign battles between the Axis powers (Italy and Germany) and the Allies (mainly British troops) and noted for the famous personal rivalry between Generals Rommel and Montgomery. Not surprisingly the researches of Ardito Desio, director of the Libyan Geological Survey from 1936 to 1940, were consigned to the back-burner. His work had mainly focused on water resources and discovery of potassium salts in the Marada Oasis, but he recommended to AGIP, the Italian state oil company, drilling for oil in the Sirte Basin, but the technology of the day proved inadequate to capitalise (see, Ardito Desio: Italian geoscience legend who led first K2 ascent by Franco di Cesare, Franchino Aristide and Francesco Guidi, First Break Vol 22, Dec 2004, pp 83-89).
After the war, Britain briefly governed Tripolitania and Cyrenaica provinces and the French controlled the adjoining largely desert Fezzan province. A newly independent United Kingdom of Libya was established in 1951 as an extremely poor, war-ravaged country via a settlement brokered through the United Nations. The three provinces were combined with three separate capitals Tripoli (Tripolitania), Benghazi (Cyrenaica) and Bayda (Fezzan) under King Idris as-Senussi, previously Emir of Cyrenaica and the leader of the Senussi Muslim Sufi order.
King Idris courted unpopularity by abolishing the federal system and the provincial legislative assemblies in 1963 and was always vulnerable for being beholden to western powers. He was eventually deposed by Muammar Gadaffi in 1969 in a coup d’état fuelled by perceived regime corruption, Arab nationalism and in the wake of unrest at the West’s support for Israel in the 1967 Six Day War.
The reign of King Idris, however, had been distinctive in bearing witness to the discovery of oil and the establishment of a framework to develop the new found resources. Libya’s prospects were transformed, joining OPEC as the second-largest oil producer behind Saudi Arabia with production peaking at some 3 million barrels per day in 1970, and the economy booming.
The finding of oil in neighbouring Algeria in 1953 had proved to be a powerful call to action. Legislation in the mid 1950s provided the fiscal terms and conditions for prospecting by international companies, 14 in the original round of concessions, notably Esso (as it was then) and the Oasis group (renamed Waha Oil Company) made up of Continental (ConocoPhillips), Amerada (Hess) and Marathon Oil, but Europen companies were also in the mix. Esso was to be the developer of the first oil from Zelten (now Nasser) field in the prolific east Libyan Sirte Basin (estimated reserves at the time of 2.5 billion barrels), discovered in 1956 with production beginning in 1961. By the end of the decade Libyan output with pipelines to terminals on the coast had risen spectacularly, focused on the Sirte, Ghadamis, Muruzq and Tripolitania basins (with accumulations in Paleozoic, Mesozoic and Tertiary strata). By 1969 14 major fields had been discovered with Libyan exports profiting from the quality of the crude and access to Western European markets with no Suez Canal to contend with.
Everything changed when the 27-year-old military officer Gadaffi emerged as de facto leader in a bloodless coup while King Idris was seeking medical treament in Turkey. Reflecting a trend across Middle Eastern countries culminating in the 1973 oil crisis, Gadaffi immediatedly began the process of nationalising the petroleum industry, establishing the Libya National Oil Company in 1970 and squeezing more revenue from international oil companies. The initial result was more money for Libya to be invested in education, healthcare, and infrastructure. Living standards for many Libyans were improved as part of Gadaffi’s vision for his country based loosely on his philosophising in the The Green Book, which rejected both capitalism and communism. Prosperity at home came at the price of brutal crushing of opposition and all the predictable corruption and nepotism associated with dictatorial rule.
With investment from the oil industry already dwindling and confronted with severe loss of revenue from reduced oil production, Gadaffi turned Libya into a pariah state with his well-documented support for anti-Western terrorist organisations worldwide.
This was highlighted by Libya’s apparent involvement in the 1986 bombing of a Berlin nightclub in which two American soldiers were killed prompting retaliatory US air attacks on Tripoli and Benghazi, killing 35 Libyans, including Gaddafi’s adopted daughter. The 1988 bombing of the Pan Am flight over Lockerbie in Scotland was the most notorious atrocity involving Libya.
Yet Libya was allowed back into the international community after Gadaffi admitted responsibility for Lockerbie, paid compensation to families of victims, and also renounced his weapons of mass destruction programme. In September 2004 President George W. Bush formally ended a longstanding embargo ordered by President Reagan on US company operations in Libya. This led to a revival of Libya’s oil fortunes with badly needed investment.
Normalisation was short-lived. Ever since Gadaffi was finally overthrown during the Arab Spring protest movements in 2011, Libya’s rival factions have been unable to come to terms. Oil output has been disrupted repeatedly in the chaotic decade including civil war in 2014. The country remains divided between two rival authorities.The Government of National Stability (GNS) in Benghazi established by the Sirte-based House of Representatives (HoR), is predominantly backed by Egypt, Russia and the United Arab Emirates (UAE). It holds sway over the eastern and southwestern regions, and is aligned with the self-styled Libyan National Army led by Field Marshal Khalifa Haftar, who exercises control over the majority of the country’s oilfields.
Meanwhile, the Government of National Unity (GNU) under Prime Minister Abdul Hamid Dbeibah, predominantly supported by Turkey and Western nations, and endorsed by the UN, exercises control over the capital, Tripoli, and surrounds.
In August last year, Libya lost more than half of its oil production, about 700,000 bpd with some exports during a stand-off between rival political factions over the central bank.
There are some good omens for the successful conclusion of the intended licensing round. Over the past 18 months, key players such as ENI, bp, OMV and Repsol have lifted force majeure and resumed upstream activities. But violence lurks, for example, in May deadly clashes in Tripoli followed the killing of powerful militia leader Abdelghani al-Kikli, also known as Gheniwa.
Finally Libya is not averse to pursing oil ambitions overseas. Greece recently invited Libya to start talks on a controversial, probably unlawful, deal signed in 2019 between the Libyan government (now endorsed by all factions) and Turkey. This would recognise Turkey’s claim to an Exclusive Economic Zone (EEZ) over a wide-swathe of the Eastern Mediterranean. With implications for Cyprus and Egypt, this is a potential regional hotspot the world could do without.
The marriage between oil and politics has rarely been harmonious.
Everything changed when Gadaffi emerged as de facto leader
