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The Masquerade 367

Libya. He also announced his intention of withdrawing the sterling deposits
held by his government in London.
British official reaction to the expropriation was mild, almost indifferent.
Libya provided only 5 per cent of B P’s production world-wide; there was a glut
rather than a shortage of oil on the world’s markets; and Britain’s financial
reserves were deemed to be healthy enough to withstand the withdrawal of
Libya’s funds. Indeed, such was the confidence of the British government of
the day in the robust state of Britain’s economy that the withdrawal was held to
be a blessing in disguise, since it helped to prevent sterling from rising too high
against the dollar and other currencies. For BP, however, the loss of its
concession for the Sarir field, the largest in Africa, which it shared with Bunker

Hunt on a fifty-fifty basis, was not entirely an occasion for imperturbability.
Still less was it so for BP’s co-concessionaire, Bunker Hunt, to whom Qaddafi’s
coup de theatre looked uncomfortably like the penultimate step in the liquida­
tion of its own concession.
Events at Geneva in January 1972 were a repetition of those at Tehran a year
earlier. The oil companies yielded to the arguments of the OPEC ministers
about the depreciation in the international value of the dollar and agreed to
increase the posted price of oil by 82 per cent, which would give the Gulf oil

states alone a further $700 million in revenue in 1972. Libya, naturally, refused
to accept the settlement, which indicated that a further turn of the screw was to
come, doubtless of sufficient degree to provoke the admiration of the rest of
OPEC and excite their cupidity. The companies resignedly agreed to play their
part in the forthcoming spectacle by undertaking, when the time came, to
adjust the prices they had only just fixed so as to reflect any higher settlement
they might reach with Libya. They had progressed from post hoc to ante hoc
price ‘ratcheting’. On participation, OPEC, running true to form, set its initial
demands high - 20 per cent ownership of the companies’ producing assets
immediately, rising by progressive annual increases to a 51 per cent sharehold­
ing, the whole to be obtained at the net book value of the companies’ assets, i.e.
at virtually nominal cost. The OPEC ministers also insisted that agreement

between the companies and the individual member states on the implementa­
tion of the proposals would have to be reached by the end of 1972.
For the companies, the prospect opened up by participation was a dismal
one. From being the arbiters of the international oil market they faced relega­
tion to the position of bondservants to the oil states, compelled to produce oil
on the latter’s behalf and to purchase it at prices they laid down. The sole
purpose of participation was to aggrandize the wealth and power of the
producing states. It was, as the experienced oil consultant, Walter J. Levy, has
accurately defined it,

mainly a device through which they [the OPEC governments] smoothly and by
arrangements with the international oil companies plan to obtain complete control over
eir countries total oil operations. It represents a grand design by the producing