Current Unrest in the Middle East and North Africa | Free Essay Example

Current Unrest in the Middle East and North Africa

Words: 744
Topic: Politics & Government
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Impact on Energy Policies

Some policies have had a serious effect on foreign investments, especially the international sanctions that massively reduced foreign and international involvements of Libya with outside countries like the US. These regulations and restrictions put on oil industry equipment and operations severely affected the country’s development. Libya’s oil industry faced several problems that continue to haunt the country’s LNG plant up to today.

This is because Esso built the existing LNG plant in the 1960s and the said sanctions restricted Libya from acquiring the best technology required in separating Liquefied Natural Gas (LNG) and natural gas. Libya continues to find it difficult to explore new fields while maintaining the existing oil reserves, due to those past sanctions and other disagreements involving foreign countries. Libya harbor is the largest oil reserves in the whole of Africa, and it is the eighth largest oil producer in the world.

The oil consumption is approximately 72% while the natural gas consumption stands at 28%, with a 40% of the gas consumption used in generation of electricity (Gelvin, 2008). Libya is one of the most preferred oil- producing countries due to the reduced cost for the oil production, and its nearness to the markets in Europe.

Impact on World Politics

Over the years, Libya has been trying to come to terms with a power struggle in the region due to its energy wealth while the aggression between Tripoli and Benghazi persisted since each one of them wanted to host the National Oil Company (Peel, 2012). This struggled led to an involvement of other countries with an aim of saving the situation. The battle continues even after the end of an era for Col Muammer Gaddafi who ruled the country for 42 years, but he was overthrown after a revolution.

The struggle only restricts a country that is already struggling with economical and political problems after the revolution. The state- owned company, NOC, founded in Benghazi later got the headquarters in Tripoli ever since the early 1970s, which makes the people of Libya want to strike an economic balance between the two cities. To avoid theses struggles, Mustafa El Huni, a member of NTC suggested a policy that would slip NOC into three distinct companies such as Exploration, Refining and Natural gas entities.

The National Oil Corporation is the largest company in the country’s oil industry, ever since the authorization of oil drilling in Libya. The Libyan government has been going through a decade of international sanctions while trying to devise ways of fully recovering from the regulation and contracts uncertainties. The government plans to explore more oil reserves and increase the production capacity in the country.

Impact on Energy Prices and overall Economy

The NTC plans to create a ministry of oil that can reduce the powers owned by National Oil Company and continue creating jobs for the Libyan people. Energy redevelopments can be achieved comfortably since the frozen $100 billion worth of assets got freed already. The current unrest causes the price of oil to increase up to $124 per barrel, the highest price ever since the August 2008 attacks on the oil reserves in Libya.

The increase in pricing seems to spread from the country where the product is produced to the rest of the world. This shows that crisis and cases of unrest affect the prices of oil upwards that in turn affects the global oil and gas prices. As compared to the amounts of oil produced in the 1960s (when the Libya’s oil production was at its peak), the subsequent years have seen a decline in the production levels, an issue that needs to be addressed by NOC.

However, crude oil production has increased between the year 2000 and the year 2010 although the National Oil Company wishes to take the production levels to those of the 1960s. Consumption and exportation of natural gas has been a driving force to improve the oil industry by taking advantage of the pipeline infrastructure. The geographical proximity of the country to the European markets plays a vital role in the growth of exports to Europe since it uses the underwater gas pipeline (Also called Green stream pipeline). The energy industry in Libya contributes to a large part of the country’s economy since it consists of approximately 46.4B barrels of oil and around 55 T cf (trillion cubic feet) of gas reserves that total to a whooping 95% of total Libya’s exports (Energy Information Administration, 2011).

References

Energy Information Administration. (2011). Country Analysis Briefs. Energy data, statistics and analysis Associated Press. Web.

Gelvin, J. L. (2008). The modern Middle East: a history (2nd ed.). New York, NY: Oxford University Press.

Peel, M. (2012). Middle East & North Africa: Libya in Power Struggle over Oil Group. New York: Cengage Learning.