NOC Identifies ‘Illegal Contracts’ as PC Tries to Limit Power of NOC
On 26 March,the NOC issued a statement saying that it had ‘identified a group of individuals abusing the current status of political division in Libya by entering into illegal contracts with unknown or unqualified companies… offering Libyan crude oil for sale at huge discounts below the Official Selling Price (OSP)’. The NOC confirmed the only companies legally contracted the buy Libyan crude and charter shipping tankers from Libyan ports as: ENI, Total, OMV, Repsol, Rosneft, LukOil, Cepsa, Saras, API, Glencore, Socar, Unipec, Vitol, Gunvor, Petraco, and BB Energy. The NOC warned the maritime and crude oil markets that it is not liable for any other contracts and entering into these illegal contracts may lead to serious legal consequences and financial losses.
This followed a joint statement issued by the five permanent members of the UN Security Council on 24 March calling for Libya’s oil industry to remain under the control of the National Oil Corporation (NOC). The statement said, “We underscore that petroleum infrastructure, production, export and revenues belong to all Libyan people and must remain under the exclusive stewardship of the National Oil Corporation.”
In another move that may complicate Libya’s oil industry and policy, on 25 March, the Presidential Council (PC) took the decision to assume power over oil sector policy from the NOC, thereby significantly curtailing NOC Chairman Mustafa Sanallah’s wide-ranging powers which he had wielded temporarily in the past year amidst the political split. Oil sector policy decisions were previously handled by the General National Congress’s (GNC) defunct Ministry of Oil and Gas (MOOG). The PC’s decision effectively strips all oil sector functions from the former MOOG and divides them between the PC and the NOC. Under the new decision (270) issued on 25 March, the PC will have full policy power including endorsing EPSA contracts, licensing concessions, pricing, setting the NOC’s recurrent budget and investment envelope, and setting standards.
Under the terms of the decision, the NOC retains regulatory and operational roles and manages NOC subsidiaries, but now only recommends (rather than decides) the budget, plans and key policy decisions. The NOC issued a follow-up statement on 27 March, saying that the Presidency Council does not have the legal power to change or limit the authorities, duties and responsibilities of the NOC. Sanallah said “I have asked the Presidency Council to withdraw its recent resolution. It has exceeded its authority. Only the House of Representatives, the legislature, has the power to make these changes. This is because NOC’s authorities, responsibilities and duties are based on its Articles of Association which were issued as a law by the legislature under No .24/1970 and No .10/1979.”