Ghanem tells Ambassador Gene Cretz "76 percent of the positions in the oil and gas industry in Libya were occupied by "foreigners." Many of the positions are jobs he thinks Libyans could be doing (although jobs requiring "experience with new technologies" would still require "expatriates").
A Libyan privatization board was set up recently and welcomed US companies" in February 2010. And, in a cable titled, "U.S. Foreign Commercial Service Opens For Business in Libya," suggests that over the course of the past years Libya has become more and more open to US corporations, particularly energy, telecommunications and construction companies. The cable describes Libya's efforts "to diversify its economy and to privatize government enterprises." Department of Commerce Assistant Secretary and Director General of the U.S. and Foreign Commercial Service Israel Hernandez, who has just opened up a "new Foreign Commercial Service office at the Embassy and discussed commercial opportunities with U.S. and Libyan business leaders and cooperation with senior Libyan government officials," talks about Libya as "one of the fastest growing markets for U.S. trade."
However, months ago, in June 2008, a cable is sent out lamenting how soaring oil prices are making it possible for Libya to push for "more stringent long-term contracts with foreign oil and gas producers." The cable describes a Libyan national oil company ratifying a twenty-five year extension for a contract with Italian firm Eni North Africa BV. The outcome is seen as something that may lead international oil companies (IOCs) to abandon "production efforts" in Libya (this in spite of the fact that Libya is "widely perceived to be one of the relatively few places in the world with significant unproven reserves of sweet, light crude and natural gas").
Several other major extensions are anticipated in the coming months, including those involving U.S. firm Occidental Petroleum (along with Austrian partner OMV) and Petro-Canada. Those agreements were signed with the NOC in late 2007, but still require GPC [General People's Congress] ratification. It is possible the NOC will seek further concessions in light of its deal with Eni. Spain's Repsol and the NOC are renegotiating along the EPSA IV contractual model. The initial deal between Repsol YPF and NOC stipulated a 50-50 split of production; however, the NOC is now seeking a minimum production share of 72 percent.
"The NOC has approached numerous other IOCs about extensions, raising the possibility that it will reopen deals that were only concluded a few years ago. Even the U.S. Oasis Group (comprising Amerada-Hess, Marathon and ConocoPhillips), which paid $1.8 billion in December 2005 to return to acreage in Libya's Sirte Basin that it held before the suspension of U.S.-Libyan diplomatic ties and the imposition of U.S. and UN sanctions, may be affected. Libya's relatively modest 59.2 percent production share in that deal has generated preliminary probing by the NOC as to whether the Oasis Group would consider renegotiating, which it has so far successfully opposed" [emphasis added]
The diplomat authoring the cable comments:
Libya and the IOC's have been here before: a spate of renegotiations and extensions occurred in the late-1960s and early 1970s, driven in part by the then-new al-Qadhafi regime to demonstrate to its people that it was a better steward of Libya's hydrocarbon resources than the Sanussi monarchy had been. As during that period, the current penchant for shifting the goalposts has not been well-received by the IOCs. Despite Libya's relatively unique position in terms of unproven reserves, high quality oil and low recovery costs, observers here expect that some IOCs facing potentially long renegotiation periods (and associated costs of idle personnel and materiel) and diminished production returns may choose to abandon altogether their production efforts in Libya.
How Saif benefits from Libyan oil business is detailed in the cable, "Qadhafi Incorporated," from May 10, 2006, which details how Muammar al-Gaddafi's children supposedly have "income streams from the National Oil Company and oil service subsidiaries." Saif is believed to be "involved in oil services through One-Nine Petroleum and other Qadhafi family members and associates are believed to have large financial stakes in the Libyan Tamoil oil marketing company based in Europe and Oil Invest." And notes, it is "believed that millions of dollars are distributed to politically connected Libyans and Libyan expatriates."
Several cables mention Muammar's plan to redistribute the country's oil wealth to Libyans through a privatization scheme. That aspect of Libya's recent history is worth exploring further as it seems like it is much more likely to have been a ploy to open up Libya to more foreign investment. US cables show the Libyan government has typically not wanted to up the standard of living for Libyans because it might lead to political instability. (Of course, they didn't expect neighboring countries to inspire Libyans to revolt so the fear of raising Libyans to a better standard economically is no longer likely a chief concern for leaders at this moment.)
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