The Arab Gulf Oil Company (AGOCO), Libya’s largest petroleum maker, will discontinue its oil production until the war's end. Abdeljalil Mohamed Mayuf, the information director for the Arab Gulf Oil Company, said that production must be halted because of the chance that the company could be attacked by Muammar Gaddafi's army.
Attacks earlier in 2011 caused damage to a pumping station in Messia. Another pumping station with a line to Tobruk has been attacked as well. The petroleum company is unable to protect its pumps from military actions, prompting operations to stop until the end of the unrest.
Oil prices have risen due to the revolts. Vitol, an oil trading firm in Libya, has taken backwards steps for exporting oil from two towns in Libya. Analysts feel that Vitol will follow the footsteps of bigger companies by ceasing business in the area until the conflict ceases.
AGOCO was previously connected to Gaddafi's National Oil Company; therefore, conducting business with this company could pose a risk in the current political environment. The company claims that it is no longer connected to Gaddafi. However, many of the executives who worked at Gaddafi's National Oil Company have also worked for AGOCO.
The error of conducting business with an entity that is connected to the Gaddafi could be devastating with criminal penalties, according to Susannah Cogman, who works on the investigations team of the Herbert Smith law firm. Cogman is a partner at the firm and handles corporate crimes.
The war in Libya is the result of demonstrations launched in February of this year against Gaddafi, the leader of the Libyan regime. The war came on the heels of the crumbling of governments in Tunisia and Egypt after citizens began protesting against their leaders.
Key Statistics – Libya's Economy (source: CIA World Factbook)
- The economy in Libya relies on the 95% portion of export earnings from the oil industry.
- The oil industry contributes about 25% to GDP and nearly 80% of revenue that the government claims.
- The GDP in 2010 was $91 billion and in 2009 it was $86 billion
- The oil production was 1.7 million bbl per day in 2009; Libya ranks 18th in the world for oil production.
- Libya's oil reserves were 47 billion bbl in 2010, ranking the country 9th in the world.