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Libya: Gaddafi considering nationalising foreign oil companies

25 Jan 2009

Libyan leader Muammar Gaddafi said last Wednesday his country and other oil exporters were looking into nationalising foreign firms due to low oil prices and suggested Tripoli might not stick to OPEC production quotas. Speaking via a satellite link from Libya to students at Georgetown University in Washington, he called the current price of oil 'unbearable.' 'We would not adhere to OPEC's regulations because our livelihood depends on oil,' Gaddafi said, without providing any details of how Libya might not stick to the oil producing organization's quotas.

Last month, Libya told oil firms to cut output by 270,000 barrels per day from January 1, more than the curb it needs to make under an OPEC deal to pump less. Gaddafi, who decides Libya's oil policy, referred to recent Libyan newspaper reports over nationalization because of the dipping oil prices. The reports, including in the main state paper widely seen as the mouthpiece of Gaddafi, said the Basic People Congresses, Libya's top executive and legislative bodies, should vote to nationalize oil firms when they meet in the next few days.

'Oil exporting countries may move toward nationalization because of the rapidly declining prices. This is put on the table and is being discussed seriously,' Gaddafi said through an interpreter. 'Oil maybe should be owned by national companies or the public sector at this point, in order to control the oil prices, the oil production or maybe to stop it,' he told the students. 'We may refuse to sell it at this very low price.'

Petro-Canada, one of Libya's largest foreign oil producers, said it has heard no talk of nationalizing its interests in the North African country. 'We continue to have a cooperative relationship with the government of Libya, both signing agreements last summer and implementing contracts,' said Andrea Ranson, spokeswoman for the Calgary-based company. In June, Petro-Canada signed six long-term exploration and production deals with Libya's state oil company that it said would lead to a doubling of production there. U.S. companies ConocoPhillips, Hess Corp and Marathon Oil are active in Libya under a consortium called Oasis Group with Libyan National Oil Corp. Other U.S. firms involved there are ExxonMobil, Chevron and Occidental.

Gaddafi said he hoped nationalization could be avoided by a price rise. 'We hope that the prices will go up again, say $100 a barrel, so that this idea would be discarded, to stop this idea of calling for nationalization,' he said. 'However, with the decline, this would remain on the table.' Gaddafi said his country had been 'tempted' by oil prices when they were $150 a barrel and had embarked on ambitious infrastructure and other programs. 'We entered into billions and billions (of dollars) of contracts,' he said, adding they had now become a problem.

Reports of nationalization come after Libyan National Oil Corp released a report for 2008 suggesting officials want to modify policy based mainly on production sharing agreements. Some diplomats argue such reports are aimed at putting more pressure on oil firms in upcoming negotiations. Libya earned $5.4 billion in additional oil revenues from changes to contracts with four foreign companies last year, Libyan National Oil Corp said in its report made public last week. 

Source: Reuters

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