1.08.2005
Libyaninvestment.com

Petroleum law no 25 of 1955 has undergone several amendments the last being law no.3 of 1983 recently the said law has been under revision, and a new proposed law has been drafted.

The national Oil Corporation (hereinafter NOC) the state corporation regulating the oil sector, and its representative in oil exploration contracts, was first incorporated under this name in term of law no 24 of 1970. However it was reorganizing in 1979 by virtue of decision no 10 of 1979 of the general people's congress. The said decision is important piece of legislation relative to the activity of the NOC) and its relationship with its contractual partners.

There are also some petroleum regulations for the purpose of implementing the rules of the petroleum law. Regulation no.8 and no.9 are the most frequently referred to.

The petroleum law is basically the law of the old fashioned contracting model of concession. Since the seventies, the exploration and production sharing agreement (hereinafter EPSA) has substituted the concession model as a more practical and fairer set-up for sharing the benefits of doing business in the oil sector between the state and foreign oil companies.

In term of Article 5 of the afore- mentioned decision no. 10 of 1979 EPSA is basically governed by the terms and conditions agreed upon such terms and condition do not vary substantially in respect of the basic principles found in many agreements, but they may differ in respect of the extent of rights and obligations of the respective parties.

Although the NOC is authorized to prepare a model EPSA agreement as per Article 23 of decision no 10 of 1979, until now there is no such standard model.

General responsibilities under the Libyan petroleum law and its implementing regulations.

Such responsibilities may be summarized as follows.

1- to sign an undertaking to refrain from involvement in political activity.

2- To take all appropriate legal steps to comply with the rules commercial code and other applicable laws relevant to the activity of the foreign oil company.

3- To carry out all petroleum operation in compliance with rules set out in petroleum regulation No. 8 dealing with safety measure and the conversation of petroleum resources and in compliance with sound and reasonable standards.

4- To comply with the requirements of petroleum regulation No.9 regarding the financial , administrative and technical control for the preservation of Oil wealth.

5- In case a foreign oil producing company owns a pipeline and there is surplus capacity in the available to other companies needing to use such facility for the transport of their crude oil. This shall take place upon the request of the companies needing to use such facility, and subject to charging and reimbursement of other costs depending on circumstances, as long as the transport of other companies oil does not affect the interests of the company owning the pipeline.

6- To take all reasonable precautions in order to prevent or hazards to human life, property, natural resources, beaches, archaeological, religious, or tourist places, cemeteries, and public installations, as a result of petroleum operations.

7- To ensure that the machinery, equipment, and materials used in petroleum operations are in conformity with the safety and efficiency standards prevailing in the oil industry.

8- To obtain a license for the re-export of any goods that is out of use in petroleum operation , provided that such good are permanently out of use. However, this dose not prejudice the right of the foreign oil company to obtain a license to re-export any equipment or tools for repairing outside Libya, provided that an undertaking is given to return such equipment or tools within a period of time fixed by the licensing authority in the oil sector.

On the other hand a re-export license may be granted in respect of data, analysis and results of geological, seismic and magnetic surveys of a special type , for the purpose of obtaining final interpretations that can not be carried out locally.

Liabilities Under petroleum Law.

These liabilities include the following:

1- any violation of the provisions of the petroleum Law or the provisions of regulations issued there under, are subject to a fine not exceeding five thousand Dinars, in respect of each separate offence. However the Total fine may reach ten thousand Dinars in the case of replace.

2- In the event of causing loss or waste of crude oil or other hydrocarbon materials, the production oil company is liable to pay the value of the said crude oil or other hydrocarbon materials, in addition to the above mentioned fine.

3- In the case of causing damage to oil reservoirs or beaching the sound standards prevailing in the oil industry, as a result of not observing the rules of the petroleum Law, or the regulation issued there under, the producing oil company is obliged to pay the value of the losses resulting there from together with above mentioned fine.