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Libya between the past and the current reality of oil and gas future prospects

Libya between the past and the current reality of oil and gas future prospects

There is no doubt that the exploration of Libyan oil began in 1955 after the Libyan government granted the concession on Libyan territory to a number of foreign partners including Shell, Esso, Mobil as well Italian and French companies.

Foreign Oil companies discovered oil in Libya, and Esso discovered the oil on the border between Tripoli and Berqa in the middle in 1955, so as in the year of In 1960, when Mobil discovered Libyan oil in an area about 90-kilometers from the Libyan coast.

The discovery also led to the southern and eastern region of Libya with the presence of quantities of natural gas deep in Libyan territory.

In the last years of the end of the Libyan monarchy and the beginning of the Libyan Republic, the policy of the Libyan economy has been an economic stage that brought many parts and sectors into the Libyan social and economic development.

But the new military leaders were inexperienced to run the country and they were busy with their new 1969 Revolution at that time in Libya.

The technocratic leadership then embarked cautiously on the plans of the quintessential economic plans of the Libyan national economy, focusing initially on the fears of two fundamental problems, the social and economic aspects of Libya, including the real fact that Libya had a "Mix economy".

There was a large number of Libyans working in other inefficient government sectors outside the Libyan oil sector.

Important steps taken by the Libyan government at that time, work to draw a deliberate economy in a scientific study aimed at increasing national production and thus the government formed a council in the so-called "Supreme Planning Council" which oversees the study of major economic projects and the various social and economic development plans.

Oil production in that period of 1970 reached 3.7 million barrels per day in addition to the high and complete capacity of the pipeline systems in Libya.

This dangerous development was detrimental to Libya's long-term oil fields, nearly ninety-nine percent of Libya's oil revenues, all of which are Libyan oil exports.

Concern has always been of interest in the production of Libyan oil even in the days of the Libyan Kingdom, the Libyan oil fields used only one percent of Libyan workers in Libya's population, and development has given rise to a large number of undesirable social and economic impacts that were not easy to reconcile, between Libyans for social justice and equality in Libya.

The technocrats of the Libyan oil industry had been tempted to continue to rely on all the options of experience that existed in Libya, many of which at the time were expatriate expatriates.

By 1970, Libya had one of the most advanced oil infrastructures in the world and needed continuous improvement and maintenance.

Under these circumstances, Libya realized that the nationalization of the Libyan oil industry was not an option at that time and by needs, they switched to oil pricing in Libya as the first aspect of oil extraction and marketing at high prices, which Libya had some control over.

However, the Libyan oil sector showed some features that could be exploited effectively to give Libya a large part in the process of commissioning with the international oil companies, and the allocation of large areas of oil exploration for small independent producing companies.

In order to achieve higher profits at good standard levels, the used the rule of thumb, which is "Divide and Rule Strategy".

The poor bargaining position of independents from Libya small partnerships companies, which they were depended on Libyan oil for a large part of its oil revenues, resulted in Occidental Oil Company of America receiving 97% of Libya's total production.

This situation has led many independents to face a threat to reduce production because of their weak ability to negotiate with major companies that make up the largest production in Libya.

Independents Companies in production had very little incentive to join a production cut in 1970, a move that has taken globally to restore prices to their high status as an oil opener.

As a result of the amendments to the oil law in Libya in 1961, independents and small companies paid much lower taxes on oil drums, and this "preferred" situation harmed independent oil companies in the long run, when major companies refused to help them when the new system in Libyan demanded higher taxes.

With the increased targeting of small independent companies and the exacerbation of the severe shortage of the 1973 oil crisis that led to the nationalization of the international oil companies to obtain higher prices, so the Libyan government continued to pursue a policy of rising prices, increasing its nationalization and increasing control over production.

The Libyan government cooperated with the Algerian authorities on the began to take a series of increasingly aggressive measures targeting French oil interests in Algeria.

The small oil companies that produced more than half of Libya's crude oil and the increased prices have responded by saying that the rest of the other oil companies were only in the same queue as crude oil prices.

This result to the led for more negotiations with the oil companies to the agreement of Tripoli dated March 20, 1971, to raise the declared price of Libyan crude oil to $ 3.32 per barrel, which includes the Suez Canal premium as well as shipping premiums and low sulfur and amendments to the Suez Canal Of the annual provisions.

By 1974, the price of crude oil between Libyan and Persian Gulf oil was $ 4.12 per barrel, causing Libya to lose its cost advantage and create temporary difficulties in Libya later in the year. However, the Libyan government was bold in its ability to escalate its demands to achieve greater wills that eventually led to a wave of nationalizations for more foreign oil companies.

Between September 1969 and October 1973, oil prices increased slightly compared with four times the rise in crude oil prices by the end of 1973.

The Libyan regime became a prestigious position within the Arab regions with it oil wealth, and for the Libyan government's victories against the nationalization of the international oil companies.

The Libyan government subsequently strengthened the position of the Libya National Oil Company with the aim of playing a bigger role in the actual management of the oil industry.

Under its management, the National Oil Company took twenty-three concessions waived by the oil companies during the oil price commissioners.

The share of oil in Libya's domestic production jumped from 27 to 65 percent. Oil was the only commodity exported by Libya compared to the population of about 2 million, nearly double since Libya's independence.

Libya was characterized by a Mix Economy like many oil countries. Although per capita income of Libya in 1969 was approximately $ 2,168, it improved significantly over the level of subsistence at the beginning of the former Libyan monarchy, when Libya was Living on foreign aid and then on hydrocarbon revenues.

But Libya's oil revenues have been in huge quantities, it stood at the crossroads of prosperity, political and economic development, and mobilization of efforts and the pursuit of long-term sustainable economic strategies.

The influx of Libya's huge oil revenues that would have changed the direction of Libya economically, socially and politically, Libya was at the crossroads of mobilizing populations for political, social and economic development and seeking long-term sustainable economic strategies in Libya.

Libya did not go as it should. Libya was free of indebtedness balances, repeated basic distribution policies as a pattern of unfair development, and then embarked upon dramatic and declining foundations on an increasing niche that simultaneously aimed at putting the political system in charge of all activities Economic, political and social.

The effects on the Libyan national economy from the directives regarding the abolition of wage labor have had a severe impact on the national economy, a new beginning following a speech by the Libyan leader in 1978 on the anniversary of the Libyan revolution.

The confrontation was in the takeover of private sector businesses Libyan businessmen were put in a negative process in the life of the Libyan national economy.

The role of Libyans in private trade, which was the main artery and backbone of the Libyan economy, consisted of retailers, micro-enterprises, construction, housing, and farmers, was abolished in support of the Libyan state of social and economic development.

Gaddafi said in his speech in September 1980 that the Libyan entrepreneurs, estimated at about forty thousand commercial activists are only parasites because their economic activities do not contribute to productive activity within the Libyan Jamahiriya.

The Law of Green march against the private sector has closed down private companies all over Libya and confiscated private property that was transferred to the Libyan state with the help of the revolutionary committees in Libya.

Businesses were taken over by supermarkets that were then the "state-owned enterprises" Government is responsible for providing all the needs of the Libyan society of imports from oil technology to consumer goods.

However, the Libyan government did not give much attention to the instability of the global oil market throughout the 1970s, despite Libya's reliance on oil revenues, which is the main source of 99.9 percent of Libya's total national income, despite sea production in 1979, Libyan government's takeover of non-oil and non-banking sectors.

The prominent influence in the Libyan government's relationship with European companies and the growing hostility with Libya forced many American companies, despite the extremely lucrative terms of commercial contracts, to retreat and reconsider their investment in the Libyan Arab Jamahiriya.

In the aftermath of the Iranian revolution, the Libyan government saw the Libyan oil price more than double between December 1987 and December 1979 to unprecedented levels, allowing the Libyan government to maintain its oil production levels without prejudice to it.

But the participation of Eastern European partners in Libya was an indication that Libya's oil wealth began to decline slowly despite Libya's continued ability to attract participants to its Libyan oil industry.

The withdrawal of US partners from Libya in 1981 and the US blockade in 1982 were another sign of declining Libyan wealth.

Libya's oil production fell from around 700,000 bps to 600,000 bps by the end of the year, total Libyan oil production in 1981 was about 40 percent higher than in 1980, and this was the routine delivery of 500,000 barrels per day to the United States of America.

About 500,000 barrels per day were delivered to the United States routinely; the remainder was the result of phase-out of production and cancellation of existing contracts by multinational corporations.

In addition, the oil sector in Libya had to provide incentives for the remaining companies, the price of oil dropped from $ 4 per barrel to $ 5 per barrel.

The balance of payments in Libya in 1981 showed a deficit of $ 4.80 billion, with Libya's international reserves falling to $ 2.4 billion.

With the Libyan People's Administration in Libya and the growing deterioration of the country's volatile desires caused heavy losses suffered by the ability of the Libyan state to work very orderly.

The combination of rapidly volatile revenues and the Libyan People's Administration for an economy that caused heavy losses was the result of the state's ability to operate more systematically.

By the early 1980s, Libya had all the characteristics of its resource-rich economy, but the poorly managed economy inflicted heavy losses on the state, the former Libyan regime.

Between 1982 and 1986, the country's revenues fell from $ 21 billion to $ 5.4 billion a year despite the growing need for economic reform, half the decade following the 1979 oil boom saw a relentless spending on Libya's oil resources.

The resistance has always been continuous for economic reform, former regime was able to transform Libya in a comprehensive manner with the exception of a small number of companies such as the National Oil Company, which put the bureaucratic and administrative institutions of the state directly into the hands of the people through the system of committees and political committees, Revolutionary is responsible for overseeing economic and operational directives.

The beginning of the 1980s was the beginning of another period in which there was uncertainty for the former Libyan regime in the light of the decline in Libyan oil revenues, which led to the system to several options rationally able in the presence of limited revenues.

The choices made by the former regime were to use rationality and efficiency in the management of the Libyan crises, which were to reduce domestic consumption, reduce development plans, foreign adventures and military expenditures in arming the Libyan military arsenal on the African continent.

The former Libyan regime was very cautious about the assumption in international markets because of strained diplomatic relations.

Libya did not have long-term external or long-term debt and then went to Eastern Europe and the Soviet Union for expertise to overcome economic difficulties and bring in foreign workers to Libya.

Because the doubling of oil prices to the financial abundance in Libya was the need for good financial and monetary management if it wanted to avoid serious inflation and sustainable development in Libya, the Libyan leadership should have done what it should.

Libya should include in its policy, the reduction of Libyan oil production, the recycling of Libyan oil revenues, the establishment of more detailed and complementary institutions, and as well as legal and accounting requirements and internal reforms.

New mechanisms that would limit the political and revolutionary energy of the Libyan regime, In addition, rapid flows of oil revenues have eliminated the need to use local savings or local taxes and change policies that are capable of reducing consumption in Libyan society.

The former Libyan political system used economic resources to solve the strategic political puzzles in Libya, and the government took serious attempts to plan for external resources to expand and sustain the Libyan economic circle.

At the end of 1980-1985, the economic administration suffered so much that Libya no longer issues reliable annual reports for future use.

Research institutions in Libya have made little initial information available that would allow for more coherent planning and efficiency.

Many ministerial reports and research institutions have made simple data sheets that have no real evidence on the ground, Data often reflect scenarios favored by the system Former Libyan.

With the exception of the National Oil Corporation (NOC), which has been a distinguished institution, its staff can collect data in an atmosphere not far from domestic politics and gather the necessary data in the planning and management of Libya's economy.

The National Oil Corporation, wholly owned by the Libyan state, was established in November 1970 under Libyan law to replace the Libyan General Petroleum Corporation, which was established by Law No. 13 of 1968 to take charge of Libyan oil sector operations.

The National Oil Corporation was reorganized by the General Secretariat of the General People's Congress in order to achieve the objectives of the development plan in the area of points and support the Libyan national economy by further developing and exploiting oil, reserves, operation, and investment in these reserves for high financial returns.

The National Corporation is to carry out exploration and production operations through its subsidiary company or to participate with other small independent companies under service contracts or any other type of oil investment agreement.

In addition, the Libyan Corporation to market Libya oil and gas domestically and externally, Exploration and sharing of production with it according to the international oil and gas industry and international oil marketing.

Oil and gas are considered the most important and main source of Libya's revenues, but they are still considered the most important energy in the world, which is the raw material for most chemical industries to this day.

Therefore, the continued discovery and investment of oil priorities in the renaissance and sustainable development, Libya is the oil state able to confirm That the oil industry and the gas sector, which has been subjected to systematic targeting direct and indirect as the most important pillars of the Libyan national economy.

Libya has been subjected to many economic shocks and external crises in the past and present, was the rate of production of Libyan crude oil much more than thousands of barrels per day and with the start of the Libyan crisis and under abnormal conditions stopped exports for reasons of contraction and decline in production and the decline in world prices so the rates of violation Libyan oil compared to oil revenues Very few to what Libya had been in the past.

The move to the future prospects of the fact that Libya is one of the producers of crude oil and natural gas, work to adhere to quotas allocated to production according to the ratios set by OPEC, the Organization of Petroleum Exporting Countries.

the commitment to the possibility of controlling the excess quantities in the world markets, which caused the decline in prices to levels not Preceded by the history of crude oil, and thus will benefit the countries exporting crude oil and gas prices on the way to rise again.

The decline in oil prices in previous periods negatively affected the Libyan national economy and the oil industry in Libya and showed its impact on the volume of forms of Libyan oil at home and abroad.

The violent impact on workers in the sectors of government and a severe shortage of liquidity at banks in Libya and the decline in the value of the Libyan dinar, which fell sharply against US dollar and other foreign currencies.

The improvement in the Libyan economy is due to the return of the major foreign and major energy companies together again by increasing the number of oil drilling platforms, which will move the Libyan national economy once again and the flow of hard currency to the Libyan treasury.

It is not easy to raise oil prices, which were common in the past because of the presence of large quantities in the global stockpile and because of the US companies producing rock oil and other international companies and sell them at lower prices, competing with the price of crude oil from oil-exporting countries.

However, the demand for crude oil from the oil-exporting countries will be a very high demand and at a satisfactory price for all the exporting and consuming countries.

This is due to the lack of surplus stocks in the near future in the context of competition among them again.

The National Oil Corporation must return to the previous production because it is a process in itself has no inevitable, a gradual process to the rates of nature according to the strategic plans based on the correct bases in the Libyan oil industry.

To work on follow-up exploration and development and investment of oil fields, working to increase the returns from the discovered reserves through the application of the development of field’s reservoir specifications containing heavy oil and explore by land and sea with modern scientific methods away from traditional methods.

The restoration of oil and gas lines from Libya to Europe through all ports of export and gas pipeline projects from Libya to Italy and that Libya is still able to meet the challenges and meet the ambitions of the Libyan citizen in the promotion of this important vital sector supporting the economies of the Libyan state.

Libya's new prospects call for a closer look at the upcoming International Energy Agency (IEA) forecast that oil prices will return sharply in 2021 and that the current year of 2017 suggests the beginning of price recovery in global markets.

The whole world will see a revival in their economies that will raise many signs of wonder about the importance of the oil industry once again in the field of oil security, making Libya the oil state with high productivity of Libyan oil quality and in the years not too distant future.

Ramzi Mavrakis

General Director

Libya Political and Economics Consulting Organization

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