Libya tightens control over energy sector
A shake up at the top of Libya's oil and gas sector could spell a harsher climate for foreign investors
By Derek Brower
Libya has reasserted control over its oil and gas sector following the resignation of National Oil Company (NOC) chief, Shokri Ghanem, by creating a new body to oversee NOC and to regulate the industry.
The Supreme Council for Energy Affairs will become the de facto energy ministry of the country, say analysts, replacing NOC as Libya's top energy authority.
The move could also spell a harsher climate for foreign investors. Under Ghanem, NOC has been perceived as reliable partner for foreign companies operating in Libya's upstream. His opposition to greater state involvement in the energy sector was said to have triggered his resignation, first tendered in August and confirmed last month.
Libya recently blocked a bid by China's CNPCto buy Canadian independent Verenex. The government then exercised its right to buy the producer itself, but reneged on a commitment to match CNPC's offer.
Al-Baghdadi al-Mahmoudi, who analysts say has been involved in the Verenex transaction, will chair the Supreme Council, which will also contain Mu'utassim al-Qadhafi, a reform-cautious son of Libyan leader Muamar Qadhafi. His star has risen recently at the expense of his reformist brother, and Ghanam ally, Seif al-Islam, says Samuel Ciszuk, an analyst at IHS Global Insight.
Mu'utassim al-Qadhafi, says Ciszuk, also enjoys a robust power base in the country's parliament and good relations with with Ali al-Sogher Mohamed Saleh, who replaces Ghanem as chairman of NOC.
The changes show an "increasing politicisation of NOC and the oil sector at large," says Bill Farren-Price, an analyst at Medley Global Advisors. "It's not a very good advertisement for the country, especially on the heels of the Verenex affair."