Oil Companies Play Waiting Game on Libyan Crude
Source: The National, April Yee (6/15/11)
"How, with whom will they need to negotiate to revive mass production?"
Oil companies are playing a waiting game in Libya five months into a civil war whose outcome is still uncertain.
A key question is how and with whom they will need to negotiate to revive production of 1.6 million barrels per day that once formed the country's economic backbone.
Rebel forces were struggling yesterday to repair the oil refinery at Misurata, a coastal town they recaptured from Qaddafi's forces.
Guido Westerwelle, the German foreign minister, threw his support behind Col Qaddafi's opponents during a visit to Benghazi, days after the UAE also endorsed the rebels.
International oil companies have long since ceased operations in Libya. They have yet to outline plans for re-entering the country or clarifying their relationship with the National Oil Corporation, the state oil company.
Analysts predict that whatever political structure emerges, oil companies will have an easier time returning to Libya than in other post-conflict oil-producing countries, particularly Iraq, where years of sanctions stifled development.
"Libya had already come in from the cold, so it had a much more diverse investor mix," said Catherine Hunter, an analyst with IHS, the forecasting company. "They have to pay much more attention to investor rights than in Iraq. In Iraq there were only a few foreign players involved because of the sanctions."
The Qaddafi government has lost its key interlocutor with foreign oil companies. Shokri Ghanem, the former chairman of NOC, resigned from the role this month to join the resistance.
Rebels have managed to sell Libyan oil through a tie-up with Qatar, whose national oil company is marketing Libyan crude.
International support for the rebel National Transitional Council grew with the UAE's formal recognition this week. Last Thursday representatives from 30 nations, including U.S. Secretary of State Hillary Clinton, pledged over $1B for rebuilding efforts.