How BP made friends with Mu’ammar Gaddafi

23 Feb 2011 admin

On Monday, BP CEO Bob Dudley declared that “we remain committed to doing business” in Libya and stressed that offshore operations in the region were still open and continuing. That morning, stories of tanks crushing unarmed protestors in Benghazi and massacres by (British-built) sniper rifles had been front page news. As Dudley spoke, reports emerged of airstrikes targeting demonstrations across the country.

Bob Dudley didn’t amend his earlier statement, nor was he asked to. Media article after media article cited the decision to evacuate “BP staff & families” – only the 40 expat staff of course, not BP’s Libyan employees. Some referred to the controversy over BP’s entry to Libya, and whether the company had lobbied for the Prisoner Transfer Agreement and Al-Megrahi’s release. But no-one questioned BP’s right or Dudley’s judgement in continuing offshore operations, in Libyan waters only miles from Gaddafi’s continued assault?

With Libya’s enormous oil reserves – the largest in Africa with most of the country still unprospected – ever so tempting, BP had been trying to break into Libya for years. The company lobbied hard, utilising the weight and levers of the British foreign energy policy machinery, despite knowing precisely what Gaddafi stood for. Barely a year before BP signed its deal, many protestors were murdered during February 2006 demonstrations in Benghazi.

Success arrived in May 2007, with then-newly appointed BP CEO Tony Hayward and Libya National Oil Company Chairman Shokri Ghanem signed the documents in Libya’s coastal town of Sirt. PM Tony Blair flew in to witness the event and Hayward describing his delight that “Our agreement is the start of an enduring, long-term and mutually beneficial partnership with Libya.

BP had reason to be excited, and to pay the $350 million signature bonus towards new tanks and new rifles, or to be squirreled away in a hidden bank account. In the company’s words, the contract represented “The single largest exploration commitment in BP’s 100-year history and the single biggest award of exploration acreage by Libya to an international energy company in modern times.” The 54,000 square kilometres of acreage awarded to the company were four times the total of all other projects combined. The offshore Sirt basin block alone covers an area larger than Belgium. The terms of the Production Sharing Agreement signed were also more generous than those previously gained by US company Oxy and Austrian OMV.

Such a vast area in a resource-heavy area was likely to deliver, with estimates that BP would eventually spend more than $20 billion on exploration and extraction infrastructure. The offshore “seismic acquisition” – firing of high-intensity air guns into the ocean – begun in September 2008 alone was described as “one of the largest and most ambitious such projects ever embarked upon by our industry anywhere globally.”

Ian Smale, the head BP North Africa when the deal was struck, proudly described his sense of “partnership” developed with the Libyan regime over many cups of tea. Questioned about BP’s current exposure in Libya at an oil conference on Monday, Smale – now Head of Strategy for BP – responded, “With specific regard to Libya, our first concern is our people and the security and integrity of our operations.” BP’s security in Libya was provided by the military – presumably now either defected or overpowered by the growing opposition. Somehow it’s not surprising that Smale’s first concern was the security and integrity of our operations, even while newspapers were full with reports of atrocities. The frustration is that this is considered acceptable by journalists that quoted him.

Smale and Hayward themselves always knew that they were doing business with a repressive dictator. And they understood that working with Gaddafi would be easier if they could improve his image, and extoll how beneficial a relationship between Libya and BP would be for Britain.

An eight-page gleaming colour celebration of Libya’s “progress” was published. “Libya Rising” tells us that all is good: women are free, the streets are safe, Westerners are loved, people are becoming richer, BP will teach English, the country is open to business. Hints of brutal repression, prisons, restrictions on journalists or lack of democracy there are none. Not even a whiff of unhappiness. BP’s Libya business support manager Ian McGregor assures us that this is “one of the safest places I’ve been to with BP. […] Initially, most people ask about security. They think it’s very unsafe, or there are a lot of army and guns everywhere. To be honest, it’s the absolute opposite.”

The BP hired journalist goes on to describe how Libya’s “per-capita income is among the continent’s highest”, obscuring the inequitable distribution of that income and rampant poverty. NOC Chairman Dr Ghanem gets to make an appearance as well, explaining how “the importance of Libya as a stable country” makes it a good destination for investment. The regime was, after all, the most stable in Africa – Gaddafi had ruled for 42 years.

Later on Monday, CNBC broadcast part of an interview BP CEO Dudley about a new deal with India’s Reliance Industries. With the Libya story so big, correspondent Rebecca Meehan was eager to ask what he made of the situation in Libya and North Africa. The video shows Dudley relaxed and happy to explain that the situation “has not disrupted any of our businesses at any point so far. Our activities are far away from any of the troubled areas, but time will tell.” According to Meehan, he went on to explain that BP was “committed to improving the business in Libya regardless of the political situation”.
“Regardless of the political situation” – dictatorship or not.

Although to be fair to BP, the company did apparently try to improve the lives of Libyans who might not benefit from the billions of dollars the company planned to transfer to Gaddafi’s regime. On June 14 2010, BP also ran a public road safety event.

BP Road Safety Event – June 2010


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