Libya's Oil Resources

Abstract

Libya is by most definitions an oil-based economy. Yet academic study of the national oil industry is at best fragmentary. The reasons for the poor showing of the Libyan oil industry in the literature stem partly from the relative decline in its international importance since the mid-1970s and partly from the ambiguity over acknowledgement of the role of the oil industry within Libya.The growth of the Libyan oil industry dates from 1951 and the coming of national independence. There had been surveys of a small scale and technologically limited kind in Libya in the Italian period. Some shows of oil had been discovered in Tripolitania as early as 1914 when water wells were drilled to supply Tripoli city (Waddams 1980, 27). Other oil was discovered in Tripolitania in the 1930s and a full scale exploration programme was prepared in the years 1937–1940 by the Italian national oil corporation under the geological guidance of Professor Ardito Desio, but never fully implemented due to the onset of war. Indeed, Desio was to return as a consultant to the oil companies working in Libya in the 1950s.In 1953 a mineral law was issued which paved the way for the grant of concessions to foreign oil companies to explore and develop oil resources. A petroleum law was promulgated in 1955 which offered rather more favourable terms on fees, rents, royalties and expensing to the oil companies than were available in other longer established oil producing states of North Africa and the Middle East (cf. Waddams, 1980, 57–70). At the same time, the assets of the oil companies in Libya were given far reaching protection under amendments of the petroleum law. The consequence of the generous operating terms of this and subsequent revisions of the law (1961 and 1965) was a rapid growth in the number of concessionaries exploring for oil within the country. The open-door policy pursued by the government was much criticised at a later period. Undoubtedly, however, it did succeed in attracting a wide spectrum of oil companies into Libya, including the major ones, such as Esso, Royal Dutch/Shell, Texaco, Gulf, BP and Mobil, together with many small independent interests. The best international techniques for exploration and development were put to work in Libya within a very short space of time, bringing the country rapidly into the ranks of the main oil-exporting states. Oil exports began on a commercial scale in September 1961 from Esso's Zelten fields in the Sirtican area, concession No. 6.