Libyan leader Muammar Gaddafi said on Wednesday Libya and other oil exporters were looking into nationalizing foreign firms due to low oil prices and suggested Tripoli might also not stick to OPEC production quotas.
Speaking via a satellite link from Libya to Georgetown University students, he called the price of oil at $43.70 a barrel on Wednesday, “unbearable.” Last July, oil was at $147 a barrel. “We would not adhere to OPEC’s regulations because our livelihood depends on oil,” he said, without providing any further details of how OPEC member Libya might not stick to the oil producing organization’s quotas.
Last month, Libya told oil firms to cut output by 270,000 barrels per day (bpd) from Jan. 1, more than the curb it needs to make under an OPEC deal to pump less. Gaddafi, who decides Libya’s oil policy, referred to recent Libyan newspaper reports over nationalization because of the dipping oil prices.
Newspapers, including the main state newspaper widely seen as the mouthpiece of Gaddafi, said this week Libya’s Basic People Congresses, the country’s top executive and legislative bodies, should vote to nationalize oil firms when they meet in the next few days.
“Oil exporting countries may move towards nationalization because of the rapidly declining prices. This is put on the table and is being discussed seriously,” Gaddafi said through an interpreter. “Oil maybe should be owned by national companies or the public sector at this point, in order to control the oil prices, the oil production or maybe to stop it,” he told students. “We may refuse to sell it at this very low price,” added Gaddafi.
LIBYA HOPES FOR PRICE RISE
US companies ConocoPhillips, Hess Corp and Marathon Oil are active in Libya under a consortium called Oasis Group with Libyan National Oil Corp. Other US firms involved there are ExxonMobil, Chevron and Occidental.
Gaddafi said he hoped nationalization could be avoided by a price rise. “We are facing a difficult situation. We hope that the prices will go up again, say $100 a barrel, so that this idea would be discarded, to stop this idea of calling for nationalization,” he said. “However, with the decline, this would remain on the table,” he said of the talk of nationalization.
Gaddafi said his country had been “tempted” by oil prices when they were $150 a barrel and had embarked on ambitious infrastructure and other programs. “We entered into billions and billions (of dollars) of contracts,” he said, which had now become a problem.
Reports of nationalization come after Libya’s state-owned National Oil Corporation released a report for 2008, suggesting officials want to modify current oil policy based mainly on production sharing agreements. Some diplomats argue such reports are aimed at putting more pressure on oil firms in upcoming negotiations.
Libya earned $5.4 billion in additional oil revenues from changes to contracts with four foreign companies last year, NOC said in its report made public last week. (Reuters)