Libya’s all-important oil sector is facing a fresh wave of turmoil. This follows the recent mysterious suspension of the Government of National Unity’s (GNU) Oil Minister Mohamed Oun by the Administrative Control Authority (ACA). It has sparked a firestorm of controversy and raised concerns about transparency, potential corruption, and the longstanding struggle for control of Libya’s vital resource.

On 25 March the ACA, led by Abdullah Qadirbuh, suspended Oun for alleged ‘legal violations’ revealed in Case No. 178 but the details were scarce. Oun claims that he was completely unaware of the case and denied any wrongdoings. The lack of transparency has fuelled speculation and accusations of a politically motivated move.

The timing has heightened these suspicions. Oun — who has been a vocal critic of certain oil deals negotiated by the NOC and particularly those involving Italy, Türkiye and the UAE — is supported by many nationalist quarters including the powerful General Syndicate of Oil and Gas Workers. The deals have been criticised for not being in the best interests of the country. For example, many critics argue that the proposed NC7 field development agreement offered overly generous terms to the IOCs. 

This aligns with accusations from the National Gathering of Libyan Parties which claim that Oun’s suspension is a ploy to push through controversial agreements including the NC7 one. They allege that the GNU is attempting to bypass parliamentary resolutions and legal challenges to finalise the deals.

Adding fuel to the fire are allegations against the NOC’s chairman Farhat Bengdara. The National Accord Bloc in the High Council of State (HCS) accuse him of potentially holding dual citizenship which could disqualify him from his position because dual nationals cannot hold certain government positions. They also suspect him of conflicts of interest and corruption involving the contracts signed during his tenure.

The current situation reflects a long-standing struggle for control of Libya’s oil wealth. This often manifests itself in disagreements over contracts, pricing, and the role of the IOCs. A recent example involves a potential deal to develop the NC97 block with a consortium including Eni, TotalEnergies, ADNOC, and a Turkish company. This agreement’s opponents included the House of Representatives which passed a resolution preventing deals deemed harmful to national interests. The Audit Bureau and Attorney General’s Office also raised concerns about the negotiations and a court order ultimately halted the deal.

Controversy also surrounded Bengdara’s letter to Dbeibah seeking approval for the sale of the 50% stake owned by the UAE-based Trasta Energy private company in the Libyan Emirati Oil Refining Company (LERCO) which operates Libya’s largest refinery at Ras Lanuf, to an unidentified third party. The opacity surrounding this potential sale and Trasta’s various arbitration losses against the Libyan state raise further questions about transparency and potential conflicts of interest.

Amidst these controversies, various actors are demanding transparency and accountability. The HCS’ 53-strong National Accord Bloc has called for investigations into Bengdara’s alleged dual nationality and possible corruption. They demanded the reversal of Oun’s suspension as well, and suggested that his opposition to certain deals may have triggered the ACA’s action. They also expressed concern about the unprecedented ‘complicity of oversight institutions with the government,’ which could weaken crucial checks and balances.

More recently, on 30 March, nationalist activists from Misrata criticised the GNU’s actions. They claimed that it is persisting with the very expensive fuel-oil swap programme which is mainly being used by the General Electricity Company of Libya (GECOL). Additionally, they accuse the GNU and NOC of proceeding with negotiations concerning the Hamada NC7 field agreement, despite it being in violation of House Resolution No. 15 of 2023, which prohibits the disposal of sovereign wealth and renders any related agreements void.

Furthermore, they claim that the GNU is ignoring directives from the General Public Prosecutor and the Audit Bureau to halt these negotiations. It is claimed that these actions are an attempt by GNU Prime Minister Abdelhamid Dbeibah to force through decisions and squander national resources for superficial political gains, possibly in collusion with the head of ACA, who suspended Oun. The swift appointment of an interim minister is seen as evidence of premeditated arrangements to side-line dissenting voices within the government.

His provisional replacement, Dr Khalifa Rajab Abdulsadek, worked for Repsol for 16 years as a reservoir engineer in Libya and Madrid, and then with Talisman in Algeria and Iraq. In 2015-2017 he was in Calgary but then returned to Libya in July 2017 to become chair and CEO of NOC’s Zallaf Libya Exploration & Production Oil and Gas Company subsidiary. Since November 2020 he has been a senior advisor to the NOC chairman and chair of NOC’s Waha Oil Company subsidiary’s Owners Management Committee. 

The sector’s future hangs in the balance. Resolving the current crisis demands a commitment to transparency and fair play. Libya’s fragile economy hinges on a stable and well-managed oil sector, free from corruption and political manoeuvring. This crisis could lead to a reshuffle within the industry with new players emerging or current ones consolidating their control. This could have significant implications for how Libya’s oil wealth is managed and distributed.