The Latest Legal Row over Libyan Oil: PC Clashes with NOC

By Dr. Mohamed Karbal,  Managing Partner at Karbal & Co.

Since the fall of Gaddafi in 2011, the Libyan oil industry has suffered a loss through the closure of its oil ports and the fall in oil production.  Various armed factions have taken turns in controlling the oil ports, leading to a halt in oil exports emanating from certain ports.

The political division, instability and armed struggle in Libya have dominated the scene since 2014.  Last week, another struggle surfaced among Libyan government entities, and in this instance, the struggle was of a legal nature.

On March 25, 2017, the Presidential Council (named the “Council of Ministers” by the Libyan Political Agreement) issued Decree no. 270/2017 which dissolves the Ministry of Oil & Gas, an organ of the executive branch, and designates the former’s responsibilities and functions to both the Presidential Council and the National Oil Corporation (NOC).

History of the Ministry of Oil & Gas

Prior to the aforementioned Presidential Council’s decree, the Petroleum Law No. 25 enacted in 1955 and its amendments stipulated the responsibilities of implementing the law which divided the powers between the Ministry of Oil & Gas and the NOC.  The duties of the Ministry of Oil & Gas have always been limited to overseeing the production of the oil & gas industry.

The most recent law in this regard was the Council of Minister’s Decree no. 32 for year 2012.  Article 2 of Decree no.32 named twenty-three duties of the Ministry of Oil & Gas, most important of which are the approval of production plans and concession licenses.

Responsibilities of the NOC

As early as 1968, Libya sought to create a corporation that will manage the production and marketing of oil and operate as a commercial corporation free from government intervention and bureaucratic hurdles.  The Libyan Petroleum Corporation was founded in 1968 by a royal decree which granted it the right to negotiate and supervise the execution of oil concession agreements.   With the arrival of Gaddafi at the end of 1969, the National Oil Company (NOC) was established under Law no. 24/1970, effectively replacing the Libyan Petroleum Corporation.

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