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The new Libyan oil minister’s secret weapon: transparency | Johnny West

The next minister should publish every contract Gaddafi’s regime made with an oil company – that would shake up the industry

Libya’s next minister of oil already has a tough job. The industry, which produced 1.8m barrels of oil a day just six months ago, has all but collapsed, and experts disagree about how long it will take to get going again.

There are rumours of dark deals done with oil majors in return for finance and humanitarian support during the conflict of the past six months. And then there’s the suspicion, never far from the surface, that the first western intervention in the Arab spring was really about lots of lovely, light Libyan crude.

But Libya also has a huge ace in the hole, and one that is easy to play: transparency. The next minister could and should publish every contract the Gaddafi regime ever made with an oil company, over the past 40 years. Page for page, word for word. Imagine the scene …

Cut to a conference room in Tripoli, two-tonne chandeliers overhead, with a battery of cameras from the world’s media. The minister, or perhaps the National Transitional Council chairman Mustafa Abdul Jalil himself, pushes a button on a keyboard. A huge screen overhead refreshes a web page and suddenly is live.

The hundreds, perhaps even thousands, of contracts (one major oil project can have as many as 100 legal contracts governing it) are posted, digitised, searchable and downloadable. Small armies of researchers – some inside the oil industry seeking to up their business intelligence on their rivals, some outside it looking to better understand the inner workings and figure out how to minimise kickbacks and backroom deals – set to work poring over the details.

A couple of the major oil companies consider trying to enforce their right to go to court, or at least arbitration, on the grounds that the new government has breached the terms of confidentiality in those contracts, which state (we think, but don’t know, because the contracts aren’t public now) that any public release of information must be mutually agreed by both parties.

But the CEOs quickly overrule the lawyers, realising that if they won the case, which is far from certain, it would be a pyrrhic victory, standing out to the world as companies with something to hide. Especially because the NTC has already declared that it will actually honour all the contracts it has just published.

In one simple act, which would take a long weekend to organise, Libya would have catapulted from being the home of “Mad Dog” Gaddafi and mindless provocation, to becoming world leader in something tremendously cool – the idea that the oil industry does not need to be administered by a secretive cabal. There couldn’t be a more dramatic signal to the world of hope and integrity.

The companies would huff and puff, but in fact quickly buckle before the knowledge that the new Libyan government actually holds all the cards. Not only does it have huge current capacity but its main export grade of crude oil is light and sweet, particularly valued in world markets right now.

Like Iraq, Libya is simultaneously a major player and massively under-explored, and can expect to as much as double its current 43bn barrels of proven reserves. It lies just on the southern side of the Mediterranean – none of those pesky geopolitical choke points to negotiate, the Strait of Hormuz, the Suez canal, piracy central at the mouth of the Red Sea. And it has only just started to exploit its gas, although a pipeline running straight through to Sicily has been operating for the past seven years – to a Europe desperate to diversify from Russia.

Lots of people will tell Libya not to do it. The oil companies themselves, plus some misguided diplomats who feel that commercial representation of their country means blind support for business cases they don’t fully understand. Probably also a corrupt few within Libya’s web of state-owned oil companies who know they’re not going to look pretty. That’s why Libya should do it straight away, before making any other decisions and while the page is still absolutely clear.

Contrary to corporate spin, transparency of contracts does not always and necessarily conflict with commercial interest. My bet is that as with most significant shifts, the direct impact of “Transparent Libya” would be far less than many would fear. Its long-term effect, however, would be far reaching. Many things have changed about the configuration of the global oil industry in the last century, but not secrecy.

Full transparency is a new Libyan government’s guarantee against backroom manipulation by just about anyone. The minister should press that button before anyone has time to weigh in at all. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds