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Libyan oil output - how quickly can it restart? A return to pre-war output is unlikely in the short term but output of up to 1 million barrels per day is feasible within months, industry executives and analysts say
Six months of civil war have left Libya's oil industry in chaos, withfields that once pumped around 1.6 million barrels per day (bpd) deserted and export terminals,pumping stations and pipelines damaged by fighting and sabotage. But with rebel fighters now in the capital, Tripoli, and the battle for control of thecountry probably in its final phase, industry executives and analysts say much of the country'soil output could be resurrected within months if peace can be established quickly. Although it will struggle to return to pre-war output for the foreseeable future, output ofas much as 1 million bpd could be feasible within months, they say. Much will depend on the damage done to infrastructure and equipment in the last stages ofthe fighting between forces loyal to Muammar Gaddafi and rebels, backed by NATO, trying to end his 41 years of rule. An official working for Libya's Arabian Gulf Oil Company (AGOCO), which has been operatingthe Sarir and Mesla oilfields under rebel control, said on Friday that output from its areacould resume within three weeks. "Our fields are under maintenance and we're still waiting for security," Abdeljalil Mayouf,information manager at AGOCO told Reuters. "When the security is OK we will start. Perhaps two or three weeks after the improvement in security. In three weeks maybe." But even if Gaddafi avoids a bloody finish, his departure could usher in a new period ofinstability and uncertainty. Analysts, oil companies and Western governments worry that theopposition is plagued by internal division, which could prompt new fighting after Gaddafi has been removed from power, jeopardizing both post-war recovery and the resumption of oil exports. War and other traumas in oil producing nations have typically had a lasting impact onoutput. The speed of recovery in oil output depends crucially on how quickly internationalcompanies with highly evolved skills can be brought in. Following are details of Libya's oil industry, production and assessments of how long it maytake to restore output. PRODUCTION AND EXPORTS * Until the beginning of this year, OPEC member Libya was the world's 17th-largest oilproducer and Africa's third-largest. It holds the continent's largest crude oil reserves. Itsold about 85 percent of its exports to Europe. * Oil production was equivalent to about 2 per cent of global consumption, but fighting andsocial disruption have cut this to less than 100,000 bpd, and exports have stopped altogether. Many oilfields are dependent on foreign workers, who have almost all left the country. * Most of Libya's oilfields are around the Sirte Basin, which contains around 80 per cent ofits proven reserves and spans the front line between rebel and government forces. Many other key parts of the country's oil industry are still held by forces loyal to Gaddafi. * Libya has six major oil export terminals, listed with loading volumes for January from theIEA. The condition of these facilities now is not clear: - Es Sider (447,000 bpd) - Marsa El Brega (51,000 bpd) - Ras Lanuf (195,000 bpd) - Tobruk (51,000 bpd) - Zueitina (214,000 bpd) - Zawiyah (199,000 bpd) - Other unspecified terminals (333,000 bpd) DAMAGE * Damage to infrastructure was reported to be light during the first few months of fightingas both sides hoped to take full control of the country's oil industry. In March, officials saidthe terminals of Ras Lanuf, Zueitina and Es Sider had suffered only minor damage during fightingand some other oil towns had been left untouched. * But damage has increased as fighting has continued and rebels have reported significantdamage to oil infrastructure this month. It has not been possible to independently confirmreports of damage being done to oil installations, an accusation rebels have previously levelledat government forces. LIBYAN OIL COMPANIES * Libya's oil industry was formerly run by the state National Oil Co, which accounted foraround 50 per cent of the country's output. * Since fighting began, the Libyan National Council, with the help of Qatar has been able toexport a minimal amount of crude oil in the form of two partially laden tankers. The oil forthese cargoes was reported previously to have been in storage. One of these cargoes went to aU.S. refinery and the other to Italy. No exports have been reported for several weeks. * It is not clear how the oil industry will be structured after the war, but it may beplaced in the hands of AGOCO. RESTORATION * A Reuters poll of 20 analysts and industry officials last month forecast it would take upto one year to restore Libyan output to at least 1 million bpd but up to two years to get backto pre-civil war levels of 1.6 million bpd. * The longest forecast for a full recovery of oil output came from David Wech, head ofresearch at Vienna-based consultants JBC Energy. He said a return to full output capacity couldtake three to four years because significant investment in infrastructure would be necessary. * Oil industry consultancy Wood Mackenzie said it would take around 36 months for thecountry to recover its full production capacity, from whenever the crisis is resolved. Itestimates that substantial oil volumes could be back in the market by late 2012 if a resolutionis achieved by the end of 2011. But the recovery period will extend if production remainsshut-in for longer, as infrastructure continues to deteriorate. * Samuel Ciszuk, senior Middle East & North Africa energy analyst with IHS Energy, said oiloutput could theoretically be restored in 18 months but that this would be the most optimisticscenario. * "Once there is a degree of security for their personnel, it should not take too long forthe oil firms to get their workers back in. If the money's right they will go back," said MikeWittner, Societe Generale head of oil market research in New York. But it was difficult toassess how much damage had been done to oil facilities during the war, he said. "No one reallyhas a clear idea of how much damage to the oil infrastructure there has been ... Anytime youshut a field down quickly and run off in a panic there will be problems." FOREIGN OIL COMPANIES * Foreign oil firms, essential for the quick resumption of production, have spoken to rebelsat length, but the future of existing contracts with Gaddafi's government is uncertain. * Italian producer ENI , present in Libya since the 1950s, is the biggest foreignoil company there, producing 270,000 boed (barrels of oil equivalent per day) in 2010. Itscontracts are in force to 2042 for oil production, but it is not yet clear if they would behonored by any future government.
