by Staff Writers
Tripoli, Libya (UPI) Nov 9, 2011
Libya is struggling to get its lifeline oil industry up and running again after an eight-month civil war, but analysts say it could take years to do that, particularly if the still fragile security situation deteriorates.
The Libyans, still largely unaided by foreign experts fearful of the security risks, are making heroic efforts to restore production to the pre-war level of 1.6 million barrels a day.
Industry sources say that since August, when rebel forces of the National Transitional Council captured the capital Tripoli and drove longtime dictator Col. Moammar Gadhafi into the desert, the new government has pushed oil production up to 300,000-400,000 bpd.
Nuri Berruien, the new chairman of the state-owned National Oil Co., boasted recently flows could reach the pre-war level "in 15 months."
But that now seems to be highly optimistic. The Paris-based International Energy Agency reckons Libya could be producing 1.1 million bpd by the end of 2012, underlining the prospect of a long haul.
"From now on, every extra 100,000 barrels will be more difficult, costly and time-consuming to bring back," observed John Hamilton, lead author of African Energy's annual Libya's Energy Future report.
He stressed a "huge amount of investment" -- the French estimate at least $30 billion -- "is required to recapitalize the oil fields, many of which have been looted over the past six months."
Some fields, refineries and terminals were extensively damaged. And as the NTC forces who toppled Gadhafi fragment into squabbling ethnic and regional factions, the prospect of a new wave of violence, or even another civil war between the fractious militia victors, looms ominously.
"The NTC must now struggle to satisfy everyone," Texas-based global intelligence consultancy Stratfor observed.
"At stake is not just political power but also the anticipated oil revenues that will come to those able to establish a presence in the centralized power structure."
As it is, key southern oil fields in the Sahara are prey to marauding Gadhafi loyalists bent on revenge while the country remains awash in countless thousands of weapons looted from Gadhafi's well-stocked arsenals during the war.
The Libyans are pumping oil from a few eastern fields operated by the state-owned Arabian Gulf Oil Co., although the production level isn't clear.
These fields include Sarir, Libya's largest, and Mesla, which together produced 250,000 bpd before the fighting began. The region was held by the rebels during the war and damage was minimal.
The Sirte Basin, a key oil zone with the most mature fields, appears to be relatively stable right now, although the oil refinery there suffered heavy damage.
Indeed, the fuel situation in Libya is dire enough that NTC oil officials met with oil majors such as BP and ConocoPhillips of the United States in Istanbul Nov. 4 to secure fuel supplies to keep the new regime going until domestic production and refining is running again.
Henry Smith of London-based security consultancy Control Risks observes one of the high-risk zones is the oil-rich Fezzan region in the southwestern Sahara.
The region contains Eni's Elephant field and Repsol's Sharara with a combined capacity of 330,000 bpd, about one-fifth of Libya's pre-conflict output.
It was held by Gadhafi's loyalists until September and Smith assessed they were soft targets, difficult to protect against marauding Gadhafi loyalists striking from the desert wastes.
The damage there was considerable and it's likely to be many months before production on any sizeable scale can be restored.
"The most significant security threats to oil assets are in the Ubari sand sea, broadly between Ghadames, Sabha and Ghat," he noted.
"It's not secure and anyone who's been there will tell you it will remain difficult to police, particularly given the lack of a central security force."
There's a significant risk too that remnants of Gadhafi's forces could wage a guerrilla campaign of sabotage against the oil industry and other vital economic sectors.
Some analysts say a full-blown insurgency like the one that erupted in Iraq against the Americans in 2003 and battered the oil industry for years is unlikely to be repeated in Libya.
But even limited violence could impede the Libyan recovery, including scaring off foreign companies whose expertise and investment is vital to the postwar recovery.
Powering The World in the 21st Century at Energy-Daily.com
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New US offshore oil leasing plan includes Arctic
Washington (AFP) Nov 8, 2011
The Obama administration on Tuesday proposed a new plan for offshore oil and gas leases in the Gulf of Mexico and off the coast of Alaska, including the environmentally sensitive Arctic. The proposed program for 2012-2017 sets out 12 lease sales for areas owned by the federal government in the Gulf of Mexico and three in Alaska, including the Beaufort Sea and Chukchi Sea areas off the northe ... read more
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