National Oil Corporation
Encyclopedia
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).
and Algeria
), 41.5 Goilbbl as of January 2007, up from 39.1 Goilbbl 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 43.1 Goilbbl of oil equivalent (367,00 0 bbl (0 l) of oil, 37.7 Tcuft of gas, 0.1 Goilbbl 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 USD $50.2 billion in 2006.
oil well
was drilled onshore
in the Sirte Basin. Libya granted multiple concessions to Esso
, Mobil
, 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 in 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.
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). The 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 who 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 were reached with Exxon, Mobil, Elf Aquitaine
and Agip
provided production-sharing on a 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%). Overall, during 1976 the National Oil Corporation produced about 408000 oilbbl/d and exported 1.2 mmbpd.
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.
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 forces remaining US oil companies to leave Libya but allows 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 263000 oilbbl/d. 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 Bulgarian 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.
r
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 will abandon WMD
programs and comply with the Nuclear Non-Proliferation Treaty
. The US welcomes the move, but says it will maintain economic sanctions until it sees evidence of compliance. On 4 June 2004, US Assistant Secretary
of Commerce William H. Lash
announced that Libya 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. Since then, oil majors have stepped up exploration efforts for oil and natural gas in the country. Likewise, companies have tried using enhanced oil recovery
(EOR) techniques to increase production at maturing fields.
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. Winners of Libyan exploration area are determined based on how high a share of production a company is willing to offer NOC. Whichever company offer NOC the greatest share of profits is likely to win. In addition, oilfield developers initially bear 100% of costs (exploration, appraisal, and training) for a 5-year minimum, while NOC retains exclusive ownership. Also included in Libyan licensing rounds was open competitive bidding and transparency, joint development and marketing of non-associated natural gas discoveries, standardized terms for exploration and production (E&P), and non-recoverable bonuses.
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). IOC exploration will use imaging technology and stratigraphic concepts, extending to the Palaeozoic basins. These include the Murzuq, Kufra and Cyrenaica
Platform regions, as well as the deeper Palaeozoic plays in the semi-mature (Ghadames) and mature (Sirte) basins. In 2007 it was estimated that only around 30% of Libya has been explored for hydrocarbons. In the Murzuq Basin, shows in oilwells in the early 1980s, followed by discoveries of giant fields like Elephant in 1997, opened a vast, formerly condemned, marginal province.
. 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, 280 Gcuft 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. Development of the Bahr Essalam, Wafa and Bouri Field
s, 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.
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.
and Norsk Hydro
. Also located in Murzuq Basin is Eni’s Elephant field
, onshore in Block NC-174. In October 1997, a consortium led by British company Lasmo, along with Eni and a group of five South Korean companies, announced that it had discovered large recoverable crude reserves 750 kilometres (466 mi) south of Tripoli
. Lasmo estimated field production would cost around $1 per barrel. Elephant began production in February 2004. Eni (33.3% equity interest) operated the field for joint-venture partners NOC (33.3%), Korea National Oil Co. (16.67%), SK Corp of Korea (8.33%), Majuko Enterprise, Ltd. of Korea (5%), and Daesung Industrial Co. Ltd. of Korea (3.3%). The field was expected to produce 150000 oilbbl/d when fully operational in 2007.
WOCs Waha fields currently produce around 350000 oilbbl/d. On 29 December 2005, ConocoPhillips
and co-venturers reached an agreement with NOC to return to its oil and natural gas exploration and production operations in Libya and extend the 13 million acres (52,609.2 km²) Waha concessions another 25 years. ConocoPhillips operates the Waha fields with a 16.33% share in the project. NOC has the largest share of the Waha concession, and additional partners include Marathon (16.33%) and Amerada Hess.
A UK based company called Warefield Engineering Support Limited with URL www.warefield.co.uk is one of the major supplier to this company.
companies. Close to 380000 oilbbl/d of crude is refined by NOCs subsidiaries. Approximately 60% of refined products are exported, primarily to Europe. These are simple hydroskimming
refineries, but their products meet market specifications due to high quality crude. As of early June 2007, NOC was evaluating investment proposals for upgrading its Ra's Lanuf refinery
. Total cost of the upgrade is estimated at $2 billion. NOC is also expected to re-tender an engineering, procurement and construction contract for upgrading the Zawia refinery. NOC's refineries include:
Notes:
1. Amounts in barrels per day.
as a feed stock to an ethylene
plant with a capacity of 1.2 million tpy (tons per year). Its main products are ethylene (330,000 tpy), propylene
(170,000 tpy), Mix C4
(130,000 tpy) and P Gasoline (335,000 tpy). NOC also has two polyethylene
plants, (HDPE and LLDPE) each with a capacity of 160,000 mt/year. These plants produce various products which are mostly exported. In Brega
there is another petrochemical complex using natural gas as a feedstock. In May 2005, Shell agreed to a final deal with NOC to develop Libyan oil and gas resources, including LNG export facilities. The deal came after lengthy negotiations on the terms of a March 2004 framework agreement. Reportedly, Shell is aiming to upgrade and expand Brega and possibly build a new LNG export facility as well at a cost of $105-$450 million. The plants in this complex are:
Notes:
1. EIA 2007 (In mt/yr unless stated otherwise)
Most of the petroleum products produced by the National Oil Corporation are sold on a term basis, including to the country's overseas oil retail and marketing network Oilinvest, also known as Tamoil
. Through Tamoil, Libya is a direct producer and distributor of refined products in Italy, Germany, Switzerland, and Egypt. Tamoil Italia, based in Milan
, controls about 7.5% of Italy's retail market for oil products and lubricants, which are distributed through 3,000 Tamoil service stations. Libya's ability to increase the supply of oil products to European markets has been constrained by Libya's refineries' need for substantial upgrading to meet stricter European Union
environmental standards in place since 1996. In June 2007, U.S.-based Colony Capital reached an agreement to take over 65% of Tamoil, while the Libyan government will retain 35%. Libya will continue to control Tamoil Africa, which operates retail stations in Egypt
and Burkina Faso
, as well as other African nations. NOC oil is also sold on a term basis to foreign oil companies like Agip, OMV, Repsol YPF
, Tupras, CEPSA, and Total; and small volumes to Asian and South African companies.
With domestic consumption of 284000 oilbbl/d in 2006, Libya had estimated net exports (including all liquids) of 1.525 million bpd. The majority of Libyan oil exports are sold to European countries, such as Italy (495,000 bpd), Germany
(253,000 bpd), Spain
(113,000 bpd), and France
(87,000 bpd). After the lifting of sanctions against Libya in 2004, the United States has gradually increased its importation of Libyan oil; the U.S. imported an average of 85500 oilbbl/d of total Libyan oil exports in 2006, up from 56000 oilbbl/d in 2005. Italy's Edison S.p.A.
has committed, under a "take-or-pay" contract, to taking around half (140 Bcf per year) of the natural gas from the WLGP, and to use it mainly for power generation in Italy. Besides Edison, Italy's Energia Gas and Gaz de France
committed to taking around 70 Gcuft of Libyan natural gas. Another 70 Gcuft per year is to be produced from WLGP for the domestic Libyan market (feedstock or power generation) or possibly for export to Tunisia.
Notes:
1. Energy Information Administration (2007)
National Oil Company
A national oil company is an oil company fully or in the majority owned by a national government. According to the United States Energy Information Administration, NOCs accounted for 52% global oil production and controlled 88% of proven oil reserves in 2007.Due to their increasing dominance over...
of Libya
Libya
Libya is an African country in the Maghreb region of North Africa bordered by the Mediterranean Sea to the north, Egypt to the east, Sudan to the southeast, Chad and Niger to the south, and Algeria and Tunisia to the west....
. 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
Waha Oil Company
Waha Oil Company is an oil company based in Tripoli, Libya, engaged in the fields of crude oil and natural gas exploration and production.-Overview:...
(WOC), followed by the Arabian Gulf Oil Company
Arabian Gulf Oil Company
The Arabian Gulf Oil Company is an oil company based in Benghazi, Libya, engaged in crude oil and natural gas exploration, production and refining. It was a subsidiary of the state-owned National Oil Corporation . -Overview:...
(Agoco), Zueitina Oil Company (ZOC), and Sirte Oil Company
Sirte Oil Company
Sirte Oil Company is an oil and gas company of Libya operating under the state-owned National Oil Corporation . The company is located in Brega SOC’s operations include oil and gas exploration and production and manufacturing.-Background:...
(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 NigeriaNigeria
Nigeria , officially the Federal Republic of Nigeria, is a federal constitutional republic comprising 36 states and its Federal Capital Territory, Abuja. The country is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in...
and Algeria
Algeria
Algeria , officially the People's Democratic Republic of Algeria , also formally referred to as the Democratic and Popular Republic of Algeria, is a country in the Maghreb region of Northwest Africa with Algiers as its capital.In terms of land area, it is the largest country in Africa and the Arab...
), 41.5 Goilbbl as of January 2007, up from 39.1 Goilbbl in 2006. About 80% of Libya’s proven oil reserves are located in the Sirte Basin
Sirte Basin
The Sirte Basin is a late Mesozoic and Tertiary triple junction continental rift along northern Africa that was initiated during the late Jurassic Period. It borders a relatively stable Paleozoic craton and cratonic sag basins along its southern margins...
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 43.1 Goilbbl of oil equivalent (367,00 0 bbl (0 l) of oil, 37.7 Tcuft of gas, 0.1 Goilbbl 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 USD $50.2 billion in 2006.
Early years
Libya has attracted hydrocarbon exploration since 1956, when the first wildcatWildcat
Wildcat is a small felid native to Europe, the western part of Asia, and Africa.-Animals:Wildcat may also refer to members of the genus Lynx:...
oil well
Oil well
An oil well is a general term for any boring through the earth's surface that is designed to find and acquire petroleum oil hydrocarbons. Usually some natural gas is produced along with the oil. A well that is designed to produce mainly or only gas may be termed a gas well.-History:The earliest...
was drilled onshore
Onshore
Onshore is a term used in finance to denote the jurisdiction in which a company is domiciled and in which it pays a significant rate of tax. It is the opposite of offshore, which denotes a tax haven...
in the Sirte Basin. Libya granted multiple concessions to Esso
Esso
Esso is an international trade name for ExxonMobil and its related companies. Pronounced , it is derived from the initials of the pre-1911 Standard Oil, and as such became the focus of much litigation and regulatory restriction in the United States. In 1972, it was largely replaced in the U.S. by...
, Mobil
Mobil
Mobil, previously known as the Socony-Vacuum Oil Company, was a major American oil company which merged with Exxon in 1999 to form ExxonMobil. Today Mobil continues as a major brand name within the combined company, as well as still being a gas station sometimes paired with their own store or On...
, 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
Muammar Gaddafi
Muammar Muhammad Abu Minyar Gaddafi or "September 1942" 20 October 2011), commonly known as Muammar Gaddafi or Colonel Gaddafi, was the official ruler of the Libyan Arab Republic from 1969 to 1977 and then the "Brother Leader" of the Libyan Arab Jamahiriya from 1977 to 2011.He seized power in a...
. 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 in 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
Occidental Petroleum
Occidental Petroleum Corporation is a California-based oil and gas exploration and production company with operations in the United States, the Middle East, North Africa, and South America...
, Sincat (Italy), and formed a joint drilling company with Saipem
Saipem
Saipem S.p.A. is an Italian oil and gas industry contractor. It is a subsidiary of Italian energy company Eni, which owns approximately 43% of Saipem's shares. Saipem has contracted for designing and constructing several pipelines, including Blue Stream, Greenstream, Nord Stream and South...
(an Eni
Eni
Eni S.p.A. is an Italian multinational oil and gas company, present in 70 countries, and currently Italy's largest industrial company with a market capitalization of 87.7 billion euros , as of July 24, 2008...
subsidiary). The was accompanied by nationalization of ConocoPhillips
ConocoPhillips
ConocoPhillips Company is an American multinational energy corporation with its headquarters located in the Energy Corridor district of Houston, Texas in the United States...
's Umm Farud field in 1970, British Petroleum's Sarir field in 1971 and Amoco
Amoco
Amoco Corporation, originally Standard Oil Company , was a global chemical and oil company, founded in 1889 around a refinery located in Whiting, Indiana, United States....
'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 who supported Israel, primarily the United States. Additionally, the NOC had encountered legal actions by BP over claims of ownership. Although the 1973 oil crisis
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
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 were reached with Exxon, Mobil, Elf Aquitaine
Elf Aquitaine
Elf Aquitaine was a French oil company which merged with TotalFina to form TotalFinaElf. The new company changed its name to Total in 2003...
and Agip
Agip
Agip is an Italian automotive gasoline and diesel retailer established in 1926. It is a subsidiary of the multinational petroleum company Eni.In 2003, Eni S.p.A...
provided production-sharing on a 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
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
's 17 percent share in the Oasis Oil Company. Mobil-Gelsenberg was owned by the NOC (51%), Mobil (32%), and Gelsenberg (17%). Overall, during 1976 the National Oil Corporation produced about 408000 oilbbl/d and exported 1.2 mmbpd.
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 1980s1980s oil glut
The 1980s oil glut was a serious surplus of crude oil caused by falling demand following the 1970s Energy Crisis. The world price of oil, which had peaked in 1980 at over US$35 per barrel , fell in 1986 from $27 to below $10...
dramatically reduced government revenues and caused a serious decline in Libya’s advantage in terms of energy costs. More importantly, accusations of terrorism
Terrorism
Terrorism is the systematic use of terror, especially as a means of coercion. In the international community, however, terrorism has no universally agreed, legally binding, criminal law definition...
and Libya’s growing friendship with the Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
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
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
imposed sanctions on 7 January 1986 under the International Emergency Economic Powers Act
International Emergency Economic Powers Act
The International Emergency Economic Powers Act , Title II of , is a United States federal law authorizing the President to regulate commerce after declaring a national emergency in response to any unusual and extraordinary threat to the United States which has a foreign source.-Provisions:In the...
, 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 forces remaining US oil companies to leave Libya but allows 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 263000 oilbbl/d. 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
Rompetrol
The Rompetrol Group N.V. , is a Romanian oil company, that operates in many countries throughout Europe:unclear what "market share": refining? downstream? extraction? well services?*Romania - 2nd largest oil company, 40% market share...
, the Bulgarian Oil Company, Royal Dutch Shell, Montedison, International Petroleum Corporation of Canada, INA-Naftaplin, OMV, Braspetro
Braspetro
Braspetro was a Brazilian state company. It was founded in 1972, as a subortinated company of Petrobras, with the responsibility to find and produce oil outside Brazil...
and Husky Oil. The agreements included expenditure guarantees by the Libyan government, an important departure from earlier regulations, designed to help offset sanctions.
r
U.N. sanctions and afterward
Libya’s isolation became even more pronounced following the 1992 imposition of United NationsUnited Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
sanctions designed to force Gaddafi to hand over two suspects indicted for the 1988 bombing of Pan Am Flight 103
Pan Am Flight 103
Pan Am Flight 103 was Pan American World Airways' third daily scheduled transatlantic flight from London Heathrow Airport to New York's John F. Kennedy International Airport...
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
Petrofina
Petrofina was a Belgian oil company which merged with Total in 1999 to form TotalFina, but the name has now been changed back to Total after another merger...
, North African Petroleum, the Petroleum Development Co. (Republic of Korea) and Lasmo
Lasmo
Lasmo plc was a leading British oil and gas exploration and production business. It was listed on the London Stock Exchange and was a constituent of the FTSE 100 Index.-History:...
. 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
Spot market
The spot market or cash market is a public financial market, in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market in which delivery is due at a later date...
through third-party traders, and increase downstream investment. In 2000, NOC was reorganized by the General People's Congress
General People's Congress
The General People's Congress is the ruling political party in Yemen.Was founded in August 24, 1982 in Sana'a, YemenAt the last legislative elections, 27 April 2003, the party won 58.0% of the popular vote and 238 out of 301 seats in the Assembly of Representatives of Yemen....
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
Iran and Libya Sanctions Act
The Iran and Libya Sanctions Act of 1996 was a 1996 act of Congress that imposed economic sanctions on firms doing business with Iran and Libya. On September 30, 2006, the act was renamed to the Iran Sanctions Act , as it no longer applied to Libya, and extended until December 31, 2011...
(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 will abandon WMD
WMD
WMD may refer to:* Weapon of mass destruction, a term used to describe munitions with the capacity to kill large numbers of human beings indiscriminately* Weighted mean difference, a measure in statistical meta-analysis...
programs and comply with the Nuclear Non-Proliferation Treaty
Nuclear Non-Proliferation Treaty
The Treaty on the Non-Proliferation of Nuclear Weapons, commonly known as the Non-Proliferation Treaty or NPT, is a landmark international treaty whose objective is to prevent the spread of nuclear weapons and weapons technology, to promote cooperation in the peaceful uses of nuclear energy and to...
. The US welcomes the move, but says it will maintain economic sanctions until it sees evidence of compliance. On 4 June 2004, US Assistant Secretary
Assistant Secretary
Assistant Secretary is a grade in the British Civil Service, now more commonly styled Divisional Manager or Deputy Director. In the grading scheme they are denoted Grade 5....
of Commerce William H. Lash
William H. Lash
William H. Lash III was a United States Assistant Secretary of Commerce from 2001 to 2005 and a professor at George Mason University law school.-External links:*...
announced that Libya 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. Since then, oil majors have stepped up exploration efforts for oil and natural gas in the country. Likewise, companies have tried using enhanced oil recovery
Enhanced oil recovery
Enhanced Oil Recovery is a generic term for techniques for increasing the amount of crude oil that can be extracted from an oil field...
(EOR) techniques to increase production at maturing fields.
Operations
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). IOC exploration will use imaging technology and stratigraphic concepts, extending to the Palaeozoic basins. These include the Murzuq, Kufra and Cyrenaica
Cyrenaica
Cyrenaica is the eastern coastal region of Libya.Also known as Pentapolis in antiquity, it was part of the Creta et Cyrenaica province during the Roman period, later divided in Libia Pentapolis and Libia Sicca...
Platform regions, as well as the deeper Palaeozoic plays in the semi-mature (Ghadames) and mature (Sirte) basins. In 2007 it was estimated that only around 30% of Libya has been explored for hydrocarbons. In the Murzuq Basin, shows in oilwells in the early 1980s, followed by discoveries of giant fields like Elephant in 1997, opened a vast, formerly condemned, marginal province.
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 shelfContinental shelf
The continental shelf is the extended perimeter of each continent and associated coastal plain. Much of the shelf was exposed during glacial periods, but is now submerged under relatively shallow seas and gulfs, and was similarly submerged during other interglacial periods. The continental margin,...
. NOC has a network of onshore oil, gas and product pipelines, crude oil export facilities and a gas pipeline. The Western Libyan Gas Project
Western Libyan Gas Project
The Western Libyan Gas Project is a 50-50 joint venture between the Libyan National Oil Corporation and the Italian company Eni which came online in October 2004. By July 2007, per year of natural gas was being exported from a processing facility at Melitah, on the Libyan coast, through the...
(WLGP) is a 50-50 joint venture between NOC and Eni, which came online in October 2004. Since then, WLGP has expanded to Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
and beyond. Currently, 280 Gcuft per year of natural gas is exported from a processing facility at Melitah, on the Libyan coast, via Greenstream to southeastern Sicily
Sicily
Sicily is a region of Italy, and is the largest island in the Mediterranean Sea. Along with the surrounding minor islands, it constitutes an autonomous region of Italy, the Regione Autonoma Siciliana Sicily has a rich and unique culture, especially with regard to the arts, music, literature,...
. 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. Development of the Bahr Essalam, Wafa and Bouri Field
Bouri Field
The Bouri Offshore Field is part of Block NC-41, which is located north of the Libyan coast in the Mediterranean Sea. It was first discovered in 1976 at a depth of and is estimated to contain in proven recoverable crude oil reserves and of associated natural gas with an annual production...
s, 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.
NOC hopes to increase total oil production from 1.80 mmbd in 2006 to 2 mmbd by 2008. Foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
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.
Field development and exploration
In November 2005, Repsol YPF discovered a significant oil deposit of light, sweet crude in the Murzuq Basin. Industry experts believe the discovery to be one of the biggest made in Libya for several years. Repsol YPF is joined by a consortium of partners including OMV, TotalTotal S.A.
Total S.A. is a French multinational oil company and one of the six "Supermajor" oil companies in the world.Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and...
and Norsk Hydro
Norsk Hydro
Norsk Hydro ASA is a Norwegian aluminium and renewable energy company, headquartered in Oslo. Hydro is the fourth largest integrated aluminium company worldwide. It has operations in some 40 countries around the world and is active on all continents. The Norwegian state holds a 43.8 percent...
. Also located in Murzuq Basin is Eni’s Elephant field
Elephant field
The Elephant Field is an oil field located in onshore in Libya's Murzuq Basin.-History:In October 1997, an international consortium led by British company LASMO, along with Eni and a group of five South Korean companies, announced that it had discovered large recoverable crude reserves at the...
, onshore in Block NC-174. In October 1997, a consortium led by British company Lasmo, along with Eni and a group of five South Korean companies, announced that it had discovered large recoverable crude reserves 750 kilometres (466 mi) south of Tripoli
Tripoli
Tripoli is the capital and largest city in Libya. It is also known as Western Tripoli , to distinguish it from Tripoli, Lebanon. It is affectionately called The Mermaid of the Mediterranean , describing its turquoise waters and its whitewashed buildings. Tripoli is a Greek name that means "Three...
. Lasmo estimated field production would cost around $1 per barrel. Elephant began production in February 2004. Eni (33.3% equity interest) operated the field for joint-venture partners NOC (33.3%), Korea National Oil Co. (16.67%), SK Corp of Korea (8.33%), Majuko Enterprise, Ltd. of Korea (5%), and Daesung Industrial Co. Ltd. of Korea (3.3%). The field was expected to produce 150000 oilbbl/d when fully operational in 2007.
WOCs Waha fields currently produce around 350000 oilbbl/d. On 29 December 2005, ConocoPhillips
ConocoPhillips
ConocoPhillips Company is an American multinational energy corporation with its headquarters located in the Energy Corridor district of Houston, Texas in the United States...
and co-venturers reached an agreement with NOC to return to its oil and natural gas exploration and production operations in Libya and extend the 13 million acres (52,609.2 km²) Waha concessions another 25 years. ConocoPhillips operates the Waha fields with a 16.33% share in the project. NOC has the largest share of the Waha concession, and additional partners include Marathon (16.33%) and Amerada Hess.
A UK based company called Warefield Engineering Support Limited with URL www.warefield.co.uk is one of the major supplier to this company.
Refining
NOC owns and operates several refining facilities, in addition to many oil and natural gas processingNatural gas processing
Natural-gas processing is a complex industrial process designed to clean raw natural gas by separating impurities and various non-methane hydrocarbons and fluids to produce what is known as pipeline quality dry natural gas.-Background:...
companies. Close to 380000 oilbbl/d of crude is refined by NOCs subsidiaries. Approximately 60% of refined products are exported, primarily to Europe. These are simple hydroskimming
Hydroskimming
Hydroskimming is one of the simplest types of refinery used in the petroleum industry. A hydroskimming refinery is defined as a refinery equipped with atmospheric distillation, naphtha reforming and necessary treating processes...
refineries, but their products meet market specifications due to high quality crude. As of early June 2007, NOC was evaluating investment proposals for upgrading its Ra's Lanuf refinery
Refinery
A refinery is a production facility composed of a group of chemical engineering unit processes and unit operations refining certain materials or converting raw material into products of value.-Types of refineries:Different types of refineries are as follows:...
. Total cost of the upgrade is estimated at $2 billion. NOC is also expected to re-tender an engineering, procurement and construction contract for upgrading the Zawia refinery. NOC's refineries include:
| Refinery | Capacity | Operator |
|---|---|---|
| Zawia Refinery | 120,000 | ZOC |
| Ra's Lanuf Refinery | 220,000 | RLOGPC |
| Brega Refinery | 10,000 | SOC |
| Tobruk Refinery | 20,000 | Agoco |
| Sarir Refinery | 10,000 | Agoco |
Notes:
1. Amounts in barrels per day.
Petrochemicals
The Ra's Lanuf refinery produces petrochemicals, utilizing naphthaNaphtha
Naphtha normally refers to a number of different flammable liquid mixtures of hydrocarbons, i.e., a component of natural gas condensate or a distillation product from petroleum, coal tar or peat boiling in a certain range and containing certain hydrocarbons. It is a broad term covering among the...
as a feed stock to an ethylene
Ethylene
Ethylene is a gaseous organic compound with the formula . It is the simplest alkene . Because it contains a carbon-carbon double bond, ethylene is classified as an unsaturated hydrocarbon. Ethylene is widely used in industry and is also a plant hormone...
plant with a capacity of 1.2 million tpy (tons per year). Its main products are ethylene (330,000 tpy), propylene
Propylene
Propene, also known as propylene or methylethylene, is an unsaturated organic compound having the chemical formula C3H6. It has one double bond, and is the second simplest member of the alkene class of hydrocarbons, and it is also second in natural abundance.-Properties:At room temperature and...
(170,000 tpy), Mix C4
C4
C4, C04, C.IV or C-4 may refer to:* C-4 , a type of plastic explosive* Hafdasa C-4, an Argentine submachine gunIn biology:* C4 carbon fixation, a pathway for carbon fixation in photosynthesis...
(130,000 tpy) and P Gasoline (335,000 tpy). NOC also has two polyethylene
Polyethylene
Polyethylene or polythene is the most widely used plastic, with an annual production of approximately 80 million metric tons...
plants, (HDPE and LLDPE) each with a capacity of 160,000 mt/year. These plants produce various products which are mostly exported. In Brega
Brega
Brega may refer to:*Brega , an inhabited location in Libya**Marsa Brega Airport, the airport for Brega-People:...
there is another petrochemical complex using natural gas as a feedstock. In May 2005, Shell agreed to a final deal with NOC to develop Libyan oil and gas resources, including LNG export facilities. The deal came after lengthy negotiations on the terms of a March 2004 framework agreement. Reportedly, Shell is aiming to upgrade and expand Brega and possibly build a new LNG export facility as well at a cost of $105-$450 million. The plants in this complex are:
| Plant Type | No. | Capacity |
|---|---|---|
| Gas Liquification | 1 | 1565 Tcuft/d |
| Ammonia Ammonia Ammonia is a compound of nitrogen and hydrogen with the formula . It is a colourless gas with a characteristic pungent odour. Ammonia contributes significantly to the nutritional needs of terrestrial organisms by serving as a precursor to food and fertilizers. Ammonia, either directly or... |
2 | 733,000 |
| Methanol Methanol Methanol, also known as methyl alcohol, wood alcohol, wood naphtha or wood spirits, is a chemical with the formula CH3OH . It is the simplest alcohol, and is a light, volatile, colorless, flammable liquid with a distinctive odor very similar to, but slightly sweeter than, ethanol... |
2 | 660,000 |
| Urea Urea Urea or carbamide is an organic compound with the chemical formula CO2. The molecule has two —NH2 groups joined by a carbonyl functional group.... |
2 | 916,000 |
Notes:
1. EIA 2007 (In mt/yr unless stated otherwise)
Exports
Tamoil
Tamoil is the trading name of the Oilinvest B.V. Group, a European based downstream oil group.The Tamoil Group, which was purchased by Libyan state entities in the late 1980s, is involved in supplying, trading, refining and selling petroleum products.Recently, Roger Tamraz’s Netoil group of...
. Through Tamoil, Libya is a direct producer and distributor of refined products in Italy, Germany, Switzerland, and Egypt. Tamoil Italia, based in Milan
Milan
Milan is the second-largest city in Italy and the capital city of the region of Lombardy and of the province of Milan. The city proper has a population of about 1.3 million, while its urban area, roughly coinciding with its administrative province and the bordering Province of Monza and Brianza ,...
, controls about 7.5% of Italy's retail market for oil products and lubricants, which are distributed through 3,000 Tamoil service stations. Libya's ability to increase the supply of oil products to European markets has been constrained by Libya's refineries' need for substantial upgrading to meet stricter European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
environmental standards in place since 1996. In June 2007, U.S.-based Colony Capital reached an agreement to take over 65% of Tamoil, while the Libyan government will retain 35%. Libya will continue to control Tamoil Africa, which operates retail stations in Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
and Burkina Faso
Burkina Faso
Burkina Faso – also known by its short-form name Burkina – is a landlocked country in west Africa. It is surrounded by six countries: Mali to the north, Niger to the east, Benin to the southeast, Togo and Ghana to the south, and Côte d'Ivoire to the southwest.Its size is with an estimated...
, as well as other African nations. NOC oil is also sold on a term basis to foreign oil companies like Agip, OMV, Repsol YPF
Repsol YPF
Repsol YPF, S.A. is an integrated Spanish oil and gas company with operations in 29 countries...
, Tupras, CEPSA, and Total; and small volumes to Asian and South African companies.
With domestic consumption of 284000 oilbbl/d in 2006, Libya had estimated net exports (including all liquids) of 1.525 million bpd. The majority of Libyan oil exports are sold to European countries, such as Italy (495,000 bpd), Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
(253,000 bpd), Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
(113,000 bpd), and France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
(87,000 bpd). After the lifting of sanctions against Libya in 2004, the United States has gradually increased its importation of Libyan oil; the U.S. imported an average of 85500 oilbbl/d of total Libyan oil exports in 2006, up from 56000 oilbbl/d in 2005. Italy's Edison S.p.A.
Edison S.p.A.
Edison S.p.A is the fifth largest energy company in Italy in the field of electricity and natural gas. It produces, imports and sells electric power and hydrocarbons.-History:...
has committed, under a "take-or-pay" contract, to taking around half (140 Bcf per year) of the natural gas from the WLGP, and to use it mainly for power generation in Italy. Besides Edison, Italy's Energia Gas and Gaz de France
Gaz de France
Gaz de France was a French company which produced, transported and sold natural gas around the world, especially in France, its main market. The company was also particularly active in Belgium, the United Kingdom, Germany, and other European countries. Through its part-owned Belgian subsidiary SPE...
committed to taking around 70 Gcuft of Libyan natural gas. Another 70 Gcuft per year is to be produced from WLGP for the domestic Libyan market (feedstock or power generation) or possibly for export to Tunisia.
Energy overview
| Statistic | Amount |
|---|---|
| Proven oil reserves (2007E) | 41.5 b/bbl |
| Oil production (2006E) | 1.8 mmbd (95% crude) |
| Oil consumption (2006E) | 284000 oilbbl/d |
| Net oil exports (2006E) | 1,525 Mbpd |
| Crude oil distillation capacity (2006E) | 378 mbpd |
| Proven natural gas reserves (2007E) | 52.7 tcf |
| Natural gas production (2006E) | 399 Gcuft |
| Natural gas consumption (2005E) | 206 Gcuft |
Notes:
1. Energy Information Administration (2007)
See also
- SonatrachSonatrachSonatrach is an Algerian government-owned company formed to exploit the hydrocarbon resources of the country. Its diversified activities cover all aspects of production: exploration, extraction, transport, and refining...
- Greenstream pipelineGreenstream pipelineThe Greenstream pipeline, part of the Western Libyan Gas Project, is a natural gas submarine pipeline from Libya to Italy.-History:The idea of natural gas from Libya to Italy originating from the 1970s. Feasibility studies were carried out in the 1980s and 1990s. Construction of the pipeline...
- BregaBregaBrega may refer to:*Brega , an inhabited location in Libya**Marsa Brega Airport, the airport for Brega-People:...
- Hassan TatanakiHassan TatanakiHassan Tatanaki is a Libyan born philanthropist who has contributed substantial financial resources and time to the building of local Libyan communities civil society programs ranging from organic farming, water resource management, water and waste water treatment, the construction of educational...
- Challenger LTDChallenger LTDChallenger LTD is a provider of contract oil and gas land drilling and workover services.-History:Challenger is based in the Middle East and North Africa region, and is currently led by Chairman Hassan Tatanaki....
- List of Libyan companies