In 2010, Libya produced 1.65 million barrels of crude oil per day, more than 80% of which was exported. Over the past three months, production has plunged to less than 200,000 barrels per day and exports have virtually ceased as a result of the civil unrest and violence in the country and the sanctions imposed by the international community. Given the current political and military stalemate, it seems unlikely that the Libyan oil industry will get back on its feet any time soon. What legal options are available to international oil companies (IOCs) and oilfield service companies with operations in Libya?

The First Wave of Libyan Oil Arbitrations

The Qaddafi regime is no stranger to major international arbitrations. Following Libya’s nationalization of foreign oil concessions in the early 1970s, British Petroleum, Texaco and LIAMCO (a subsidiary of Atlantic Richfield) brought arbitrations against the Libyan government claiming breach of their concession agreements. Each of the arbitrations resulted in an award of substantial damages against the government followed by a negotiated settlement. The awards constitute important precedents in the field of international investment law.

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