Libyan Rebels Gain Ground as International Oil Companies Prepare for Return

Strategic Insights -

As Libyan rebels continue to consolidate their control over the capital, Tripoli, and sweep long-serving ruler Muammar Qaddafi from power, international oil companies are gearing up to return to a country they were forced to abandon in February when the rebellion started. Despite the challenges and dangers still present in the post-Qaddafi era, analysts believe that stability will eventually be restored, allowing oil companies to resume operations and tap into Libya's vast oil reserves.

Key Takeaways:

  • The Transitional National Council (TNC) is confident that Qaddafi's overthrow after 42 years in power is a certainty, with the TNC leader, Mostafa Abdel Jalil, declaring "The era of Qaddafi is over."
  • Saif al-Islam, Qaddafi's second-oldest son and considered his father's most likely successor, may soon be handed over to the International Criminal Court accused of war crimes.
  • The TNC's de facto oil minister, Ali Tarhouni, expects to receive favorable treatment for companies from countries that supported the TNC since the early days of the rebellion.
  • European companies with an upstream presence in Libya, including BP, Total, Royal Dutch Shell, Eni, and Repsol YPF, are making contingency plans to return.
  • US companies including ConocoPhillips, Marathon, and Hess are also eyeing a swift return, having spent months negotiating with the Qaddafi government to get back in when US sanctions were lifted in 2004.
  • Italy's Eni, the biggest foreign producer in Libya before the civil war, is expected to be one of the first companies to return, with Eni's share price rising almost 5% on the news that Qaddafi's end was near.
  • Libya's oil production, which was running at around 1.6 million barrels per day at the start of the year, is currently below 200,000 b/d, with damaged facilities and a looming risk of guerrilla warfare hindering a swift return to prewar levels.

Statistics:

  • 42 years: the length of Muammar Qaddafi's rule over Libya
  • 270,000 barrels per day: the total output of Eni in Libya before the civil war
  • 15%: the share of Eni's production accounted for by Libya
  • 9 billion cubic meters per year: the amount of Libyan gas pumped through the Greenstream gas pipeline operated by Eni
  • 1.6 million barrels per day: the level of Libya's oil production at the start of the year
  • 200,000 b/d: the current level of Libya's oil production
  • 18 months: the time it may take to get output back to prewar levels, according to Shokri Ghanem, the former head of state National Oil Corp.

Sources:

  • "Oil Majors Gear Up for Libyan Return" (Oil Daily, August 19, 2011)
  • "Qaddafi's End Marks New Era for Libya's Oil" (Oil Daily, June 28, 2011)
  • "Libya's Oil Output Falls to 200,000 b/d" (Oil Daily, July 20, 2011)
  • "Qaddafi's Sons Said Captured by Libyan Rebels" (Reuters, August 1, 2011)