National Oil Corporation

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.[5] 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.[6] 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.

The price of oil during the 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.[7] 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%).[8] pd.

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.[9] 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.[10] 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 263,000 bbl/d (41,800 m³/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 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.

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.[11][12]

During the 2011 Libyan civil war, Oil Minister Shukri Ghanem defected and fled to Tunisia.[13] In September 2011, the National Transitional Council named Nuri Berruien as chairman of the NOC during the transitional period.[14] 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.[15] However, on 2 July 2018 they quarreled again.[16]

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, Total 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 (470 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 150,000 bbl/d (24,000 m³/d) when fully operational in 2007.[19]

WOCs Waha fields currently produce around 350,000 bbl/d (56,000 m³/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-acre (53,000 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 Oil (16.33%) and Amerada Hess.[22]

In October 2013, Libya's oil minister Abdelbari Arusi revealed that the NOC was considering buying Marathon's stake in Waha.[23] In December 2019, NOC stated that it had approved France's Total purchase of stakes in the country's Waha concessions.[24]

NOC owns and operates several refining facilities, in addition to many oil and natural gas processing companies. Close to 380,000 bbl/d (60,000 m³/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.

The Ra's Lanuf refinery produces petrochemicals, utilizing naphtha 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.[25] The plants in this complex are:

Notes:
1. EIA 2007 (In mt/yr unless stated otherwise)