Sanctions made against the oil companies in Libya
On March 23, 2011, the governments of the European Union agreed to impose sanctions on Libya’s National Oil Company. This resolution was taken recently by the United Nations, and they concluded that they would add five Libyan oil subsidiaries to the European Union embargo. This action was carried out following the United Nation Security Council decision to authorize a no-fly zone over Libya. It was eventually determined that sanctions imposed upon Muammar Gaddafi’s regime in February were ineffective in ending his brutal repression of his political opponents.
Adding to UN measures, the European Union has also brought down a line of sanctions intended to freeze the assets of Muammar Gaddafi and the companies associated with him and his closest political allies. A database containing vital information has revealed names of more than 30 people included in this action, as well as entities such as the central bank of Libya and the $70 billion USD Libyan Investment Authorities. Italy has opposed the push made by Germany towards the inclusion of energy firms.
The frozen assets in the UN list include the National Oil Corporation and five of its subsidiaries previously designated as autonomous by the European Union. The impact of the oil embargo against Libya has limited the battered nation’s oil industry resources, and has led to a heavy quarrel between rebels and the Gaddafi regime. Oil investments made by several international companies were forced to be withdrawn. Libya was the 17th largest oil producing nation in the world, producing more than 1.6 million barrels per day before the conflict broke out. Around 85% of the oil produced in Libya was exported to Europe, one-third of which went to Italy. Due to the eruption of civil war in Libya, many international investors rendering oil investments to Libya are now focusing more towards the United States.
Recently, the United States treasury banned domestic companies from dealing with 14 entities managed by National Oil Corporation of Libya. Such designation forbids parties of United States firms from financial transactions with these state-owned companies, including new oil investments, and purchase of crude oil. The sudden wake of these issues in Libya has damaged the oil trade of the country. Some who were investing in oil do not experience such problems, but they are expected to be careful before they invest in these firms and countries. Investing in oil is a trade which has many ups and down, but these downfalls can be corrected by doing proper analysis of the company, before investing.