Since the 2011 revolution, the Libyan oil industry has been politicized and has faced various challenges. It has experienced a chain of setbacks that began with armed militias controlling the oil ports and halting oil exports. In addition to the armed struggle over the oil ports, the political interests of groups and individuals have affected the operation of the oil industry.
The Libyan legislature has been keen to establish two entities to manage the oil and gas industry. The Libyan Petroleum Law of 1955 placed joint responsibility on the Ministry of Oil and another entity that runs the day-to-day business of the sector. The Ministry of Oil & Gas's duties have always been limited to overseeing the production of the oil & gas industry. In 2012, the Council of Ministers (the Cabinet) issued Decree No. 32. Article 2 of the decree listed 23 duties of the Ministry of Oil & Gas. The most important duties are the approval of production plans and concession licenses.
As early as 1968, Libya sought to create a corporation to manage oil production and marketing and operate as a commercial entity 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. The contractual framework governing these agreements is examined in Libyan oil contracts and the future generation of EPSA. With the arrival of Lieutenant Gaddafi to power, the General Libyan Petroleum Corporation was replaced with the National Oil Company (the NOC) in November 1970 by Law number 24 for the year 1970 to replace the Libyan Petroleum Corporation.
It was not until 1979 that the NOC was restructured and granted broader responsibilities under Decree number 10 of 1979, which authorized the NOC to enter into joint ventures with multinational companies. Today, the NOC is the sole entity responsible for oil & gas exploration and production. It conducts such operations through its affiliated or wholly owned companies, as well as through joint ventures with international companies.
The First Brawl: Presidential Council and the NOC
On March 25, 2017, the Presidential Council (known as the “Council of Ministers” under the Libyan Political Agreement) issued Decree No. 270/2017. The Decree dissolved the Ministry of Oil & Gas, an organ of the executive branch, and assigned the former’s responsibilities and functions to both the Presidential Council and the National Oil Corporation (NOC).
With the arrival of the newly selected government headed by Prime Minister Abdel Hamid Dubaiba in February 2021, Mohamed Aoun was appointed as oil & gas minister. Another struggle surfaced among Libyan government entities, and in this instance, it was of a legal nature.
On August 14, Aoun sent a letter to the Prime Minister suggesting the establishment of a new board of directors for the NOC. S The reason for this proposal was Mr. Aoun’s assertion that Mustafa Sannallh, Chairman of the NOC, assumed the position of the Chairman of the Board of the NOC illegally. Consequently, Aoun decided to remove the NOC's Chairman, Mustafa Sannallah, and appoint a new chairman.
The Oil Minister accused the head of the NOC of holding meetings with foreign ambassadors, which he considered beyond the NOC Chairman’s authority. On August 29, Aoun issued Decision No. 35 for the year 2021, subjecting Sannallah to administrative investigation for:
(1) not obtaining prior permission for traveling on business trips and
(2) not allowing the new head of the NOC, replacement of Sannallh, to assume his duties.
The Chairman of the NOC, Mustafa Sannallah, denounced Presidential Council Decree No. 270/2017, which dissolved the Ministry of Oil & Gas, calling it illegal because the Presidential Council is merely an “executive” organ. He also rejected an attempt by the Minister of Oil, Mohamed Aoun, to suspend him and dissolve the board.
Regarding the latest round of the brawl between the Oil Minister and the Chairman of the NOC, Mustafa Sannallah dismissed the Oil Minister’s decision to replace him as illegal, since the Cabinet is the only entity
empowered to make such a decision.
The NOC on September 20 welcomed the decision by Prime Minister Abd Alhamid Aldabaiba (No. 292/2021) to withdraw the Minister of Oil’s decision (No. 35/2021) suspending the head of the NOC, Mustafa Sanalla, from his post. The NOC stated that it now considers all decisions, correspondence, and measures taken in this regard to have no legal effect. International newspapers described the latest brawl as “old personal enmity.” In conclusion, the current political vacuum in Libya and the absence of effective state institutions have fostered a sense of independence among Libyan governmental entities and agencies since 2014. Until recently, Libya had two governments simultaneously; at one point, there were three. A disregard for the role of law and regulations led some entities to assume the responsibilities of others..
