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There must be difficulty given the normal fluctuations of barrel price. Perhaps barrel price is set in the contract, or taken as a fixed price at a certain point in the process. Knowing the posted price could affect cost recovery provisions, or, under frameworks outside of EPSA IV, it could affect the amount of tax paid back to the state from the International Oil Companies.
In the vast majority of oil contracts produced (under the latest framework, EPSA IV) the Libyan National Oil Corporation (NOC) which is owned by the state, owns the majority share of oil produced in the country, with the International Oil Corporations (IOCs) taking a minority share. While the respective parties *own* the oil, we would like to find out what happens to the oil once it has been drilled.
A1 Answer: A petroleum economist in Dubai says:
Each party lifts and sells separately its share of oil and other liquid hydrocarbons. Each party has the first right of refusal to buy the other party's share of oil & gas
The state owns the Central Bank of Libya, with branches in Tripoli, Benghazi, Sebha and Sirte; so does the Central Bank of Libya control the funds paid to the state through the oil contracts? Or does the NOC hold accounts in other countries? Do any state controlled banks have correspondant relationships with foreign banks?
The Libyan Investment Authority has large shareholdings in various foreign banks, as seen in the list of companies related to the oil industry. We would presume that these are used in preference to other banks in which the Libyan state has no holding, but as of yet have not found proof that this is true.
Foreign companies, state owned petrochemical companies/refineries, or private Libyan companies?
From a Wikileaks cable dated September 2nd 2008:
The Chairman of the Libya's National Oil Corporation (NOC), Shukri Ghanem, launched the country's third privately-owned fuel distribution company, al-Rahila, in a low profile ceremony at a newly refurbished filling station last week. The al-Rahila Company is one of three companies established to participate in the privatization of fuel distribution in Libya; the other two are al-Sharara and the Libyan Company for Distribution of Petroleum Products. Al-Rahila currently owns 106 gas stations and is planning to build eight modern stations in various parts of the country. According to Ghanem, NOC will continue to have a role in fuel distribution in Libya through the state-owned Braiga Company.
Cost recovery- ie, reimbursement of exploration and production costs for the IOCs; who evaluates the cost recovery? Does whoever audits the IOCs produce reports that we can see? Do we know if the NOC is exercising right of audit, and if they are not, why not?
Answer: A petroleum economist from Dubai says:
Cost recovery is subject to pretty standard provisions, including rights of audit, and expenditures are approved by the management committee of the joint venture operating companies responsible under EPSA III or IV, with 2 representatives from the operator and 2 from NOC.
Procurement, ie. operating companies acquiring goods and services needed for exploration and/or production.
From a Wikileaks cable dated November 21 2007:
The General People's Congress (GPC) for Manpower recently directed that for every new expatriate hired by an IOC, one Libyan must be added to the company payroll... The Government of Libya's decision (under Law No. 43 of 2006) to pull back the NOC's procurement offices in London and Dusseldorf (Umm Jawaby and Medoil, respectively) also creates problems for state-run firms, which have had their supply lines interrupted by the disruption of a long-established logistics system and the ongoing movement of more than two hundred state employees from Europe back to Libya.
This implies that procurement with regards to staffing takes place at 2 levels; at a national level by the state owned staffing companies mentioned at the end of the cable, and at a regional level to hire one Libyan for every expatriate working for the IOCs.
Answer: A petroleum economist from Dubai says:
*not certain*- Libya's share of revenues is received in two ways: (1) NOC's share of production (cost oil and profit oil)
(2) NOC's payment of taxes and royalties on behalf of the IOC. With some of the aggressive bids on recent bid rounds, NOC's share of profit oil may be 90% or more
OpenOil comment: From a Wikileaks cable dated 10 Feb 2009:
The Committee for Audit and Oversight reviews all contracts involving government funding, and exercises considerable influence over the political vetting of foreign companies seeking to enter the Libyan market...Foreign firms are subject to special taxation arrangements, including the Stamp Tax, which places a special tax of 0.5-3 percent on the value of items procured by foreign firms in Libya and the Jihad Tax, which applies a 4 percent tax on corporate profits
Are there reports produced by the Committee for Audit and Oversight, or any record of their work?
Answer: A petroleum economist from Dubai says, regarding the EPSA IV framework:
The NOC pays royalties and taxes on behalf of the contractor, from its share of production; this is done so that the IOC has a tax credit which can be set against home-country taxation.
Are state-owned shipping companies used, or private companies?
From a Wikileaks cable dated August 12 2008:
Libya's maritime business, in which Hannibal al-Qadhafi (son of Muammar al-Qadhafi) plays a large role, appears to be another key sector of Libya's economy that effectively falls under the al-Qadhafi family's sway...Mariner (Mariner for Maritime Transportation, Ltd. company) is reported to be owned and controlled by Hannibal al-Qadhafi... Mariner now provides up to 75% of the NOC's requirements for transporting clean products to market, primarily in Europe..."
From another Wikileaks cable, dated 16 Feb 2009
Headed by Hannibal al-Qadhafi, the company exercises a near-monopoly in the transport of Libyan oil.
From the cable above, the organisation of "Mariner" appears to be confused, with some sources saying it is an entirely private company and others saying it received funding from the NOC as late as 2006.
Various potentially influential bodies have been present in Libya over the past few years; the Energy Ministry, which was restored in 2004 then disbanded; the National Oil Corporation, and the National Energy Council which was mentioned in a Wikileaks cable dated October 19 2006.
(The National Energy Council)... This new government entity is composed of the Ministers of Industry, Planning, Economy, Finance, and Labor, as well as Ghanem and GPC Secretary or "Prime Minister" Al-Mahmoudi... The NEC will be tasked by the full Cabinet to make energy sector decisions from time to time."
The National Energy Council, headed by PM-equivalent Al-Baghdadi al-Mahmoudi, has also been referred to as the "Supreme Council for Oil and Gas", and the "Supreme Council for Energy Affairs", as mentioned in a Wikileaks cable from October 2009.
It is unclear which of these holds overall authority with regards to decision making in Libya.