Libya’s Ministry of Oil has criticized the National Oil Corporation’s (NOC) intention to contract with the coalition of Eni (Italy), ADNOC (UAE), and TotalEnergies (France), granting them a 40% share of production.
The ministry deemed this action a “violation of Libya’s oil contractual regulations.”
In a statement, the ministry highlighted that this share is “exceptionally high and unprecedented in Libya, disrupting the equilibrium of oil contracts.”
It expressed concern that the NOC did not follow the established oil contracting procedures, by negotiating exclusively with the coalition led by Eni
“This deviates from Libyan legislation, as it lacked approval from the Ministry of Oil and Gas and the government before initiation,” the statement said.
It emphasised that the NOC could have obtained a higher share in production, through an open and transparent international bidding process.
It criticized the coalition’s 40% share, stating that it is unprecedented and unjust, potentially setting a detrimental precedent for Libyan assets.
Oil operations began in the 1950s under concession contracts, which did not allocate any share to the Libyan side, only financial compensation in the form of taxes and rents.
The ministry pointed out to the potential negative consequences of this action. It warned that it might lead other oil companies to demand amendments to their contracts for more equitable shares, as seen with TotalEnergies and ConocoPhillips.
Earlier this month, Mohamed Aoun, Libya’s Oil Minister raised serious allegations against the NOC and its Chairman, Farhat Bengdara.
Aoun has objected to Bengdara’s approval of a $10 million dollar procurement of operational materials from a Dubai-based company, alleging that this decision was made without the required consent from the Ministry.
This issue was highlighted in Aoun’s letter to Siddiq Al-Kabir, the Governor of the Central Bank of Libya (CBL).
According to the letter, Aoun underscored that Bengdara’s decision to greenlight a request by the Sirte Oil Company to purchase materials from the ‘Mediterranean Company’ in Dubai “constituted a clear breach of Libyan oil sector regulations.” He specifically cited violations of paragraph (7) of Article (23) and Article (24) of Decision (10) of 1979, about the reorganization of the NOC.
Aoun emphasised that “such financial dealings warrant the approval of the Ministry of Oil and Gas, a step that was conspicuously absent in this transaction.” As per Aoun, this oversight “represents a flagrant misuse of public funds and a disregard for the established procedures.”