Libyan Oil Contracts: Negotiating the Future Generation of EPSA

Negotiating EPSA V

The aim of this section is to shed light on issues of concern for the IOCs with EPSA IV. By highlighting the issues of concern, this article will examine how the IOCs and the NOC may enter into a fair contract that will benefit both parties.

It has been reported that EPSA IV was the result of tough negotiations. Libya was in a stronger position due to the nature of its oil, its strategic location and high oil prices at the time of negotiations. IOCs signed to EPSA IV agreed to accept low profit shares and paid large signature bonuses.

After the fall of Gaddafi’s regime, the NOC contemplated issuing a new bidding round for licensing. The attempt to launch the new round of bidding was suspended due to the political unrest in Libya. In any future negations, one has to examine the concerns of the IOCs related to EPSA IV to predict the focus of future negotiations of EPSA V. In brief, the IOCs reservations on the terms of EPSA V may be as follows:

The Management Committee

Article 4 of EPSA IV calls for establishing a management committee composed of four members. Each party will appoint two members and one of the members appointed by the NOC shall chair the management committee. The management committee will rule on all decisions concerning petroleum operations, including work programs and budgets. The committee’s decision must be unanimous and in the case of a deadlock, the matter at hand shall be referred to the senior management of each of the parties.

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