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Gadhafi's plans for nationalizing oil could have role in military intervention, experts say

ANKARA-Hürriyet Daily News | 3/30/2011 12:00:00 AM | SEVİL KÜÇÜKKOŞUM

Libyan leader Col. Moammar Gadhafi has spoken of the possibility of nationalizing foreign oil operations operating in his country, an expert has said.

Libyan leader Col. Moammar Gadhafi has spoken of the possibility of nationalizing foreign oil operations operating in his country, an expert has said.

“In 2009, Gadhafi called on Libya's General People’s Congresses, the country's top executive and legislative bodies, to vote to nationalize foreign oil firms and opened discussion to dismiss the government and deliver the $30 billion oil revenue directly to the Libyan citizens,” Necdet Pamir, an energy expert and instructor at Bilkent and İstanbul Culture universities told Hürriyet Daily News and Economic Review on Tuesday.

Elaborating on whether Libyan energy resources could be a reason for international military intervention to the conflict-hit country, Pamir said oil alone couldn’t be enough of a reason for intervention, but a significant motivation in the energy game of the world powers.

“Fully 36 percent of total energy consumed is covered by oil; coal and natural gas follow oil. All together they equal 88-90 percent of total energy consumed. Oil will keep its priority, since alternative sources such as hydrogen are not expected to replace oil in the near future,” Pamir said.

He said more than 20 percent of energy was consumed by the U.S. “The U.S. consumes more than 20 percent of the global oil supply and 45 percent of gasoline. It imports 60 percent of its energy demand and these figures are not expected to change until 2035.”

World powers such as the U.S., China and India have a high dependence on those sources, he said, adding that it would be nonsense to argue these political developments were independent from oil and natural gas resources.  

Pamir drew attention to the Gulf, then the Caspian and Africa regions for the world energy game. He pointed out a couple of ways to operate energy production in these regions. “Concession agreements are the way Western companies prefer. However, this tendency has been stretched a bit recently with production-sharing agreements as they have done in Azerbaijan and Kazakhstan,” he said.

“With production-sharing agreements, a company makes the investment and gets a share according to cost recovery with a profit rate agreed. The company and state share more equally over the course of time. All those models of agreements are profitable for Western companies. If it does not work, military interventions come up, as they did in Iraq.”

Libya had 3.3 percent of global oil production, or 44 billion barrels, a potential without reserves, he said. “Libya was producing 1.8 million barrels before the turmoil, now this has decreased to 400,000 barrels,” Pamir said, stressing the importance of oil production in Libya.  

“Libya has qualified oil, which Europeans prefer,” he noted, saying 35 foreign companies had been operating in Libya. German, French, British, Chinese, Indian, Spanish, Indonesian, Australian, Italian, American and Algerian companies were among them, he said.

Pamir drew attention to Gadhafi’s remarks in 2009 suggesting nationalizing the country’s oil and gas interests. “Gadhafi nationalized Libya’s energy sources in the 1970s and had troubles with the West. Saddam did the same and paid the cost. Gadhafi has never been a reliable leader [for the West].”

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