Background

Libya’s National Oil Corporation (NOC) is still one of the most important oil producers in the Middle East and North Africa region, but it has been hard hit by the events of the past few years. A number of international oil companies (IOCs) entered Libya during the 1950s to look for oil, with a series of major discoveries towards the end of the decade sparking excitement over the country’s potential.

After a coup that saw Libya’s then ruler King Idriss ousted, the country’s new ‘brother leader’ Muammar Gaddafi nationalised most of the country’s oil and gas assets, creating NOC to oversee the development of the hydrocarbons sector in 1970. NOC partnered with several Italian and US firms over the course of the 1970s, but also continued the process of nationalisation and renegotiation of existing deals.

Accusations of terrorism levelled against the Gaddafi regime saw the US impose sanctions on Libya, which came to include a ban on American companies working in the country. This led to an exodus of many of NOC’s most important partners. The state firm responded by offering the concessions to non-US companies.

Stronger sanctions imposed during the 1990s made the operating environment even tougher. However, a thaw in relations between Tripoli and Washington in the early 2000s saw several IOCs return to the country, with oil production rising for six successive years, to 1.8 million barrels a day in 2008.

The 2011 uprising in Libya caused oil production to collapse and placed considerable strain on NOC. Its longtime chairman, Shokri Ghanem, defected and a number of executives fled the country when the Gaddafi regime fell. Some progress was made in restoring production over the course of 2012, but growing insecurity in 2013 has left output virtually frozen and has caused a number of IOCs to question the wisdom of continued participation in the sector.

Role in Libya’s economy

NOC is the only major economic actor in Libya capable of generating revenues for the country’s interim government. Oil accounted for 95 per cent of all state revenues over the course of 2012. In September 2013 rebel groups took control of much of Libya’s oil and gas infrastructure, making it impossible to continue production. At the time of writing, it was impossible to know what the future holds for NOC.

Subsidiaries and joint ventures

NOC is partner in several joint ventures, including Eni Oil Company, Eni Gas Company and Zuetina Oil Company. It also has nine fully owned subsidiary firms: Zawya Oil Refining Company, Ras Lanof Oil and Gas Processing Company, Arabian Gulf Oil Company, Sirte Oil Company, Jowef Oil Technology, National Oil Wells Drilling and Workover Company, Brega Petroleum Marketing Company, North Africa Geophysical Exploration and National Oil Fields and Terminals Catering Company.