On Monday, OPEC came out with a remarkably optimistic forecast for Libyan oil.
Despite Libya’s oil industry being almost completely shut down by the civil war, OPEC said the country could be producing 1 million barrels a day of oil again within six months.
Full pre-war output of around 1.5 million barrels a day could be reached within 12 to 18 months because, “Libya has some of the best experts in the oil industry,” OPEC said. “If the National Oil Company is able to bring them together to start production as soon as possible, that period may be even shorter.”
This contrasts sharply with the view of the International Energy Agency, which said Tuesday it expects the full restoration of Libyan oil production to take at least twice as long.
Why? Because the IEA is doubtful that many of Libya’s oil facilities are safe enough for those oil experts to get to work.
“With Colonel Gadhafi still at large…and pockets of loyalist resistance still putting up a fight, security remains uncertain,” said the IEA.
Mr. Gadhafi has been all but defeated, but the fighting is not over. His loyalists attacked Libya’s largest oil refinery near the coastal town of Ras Lanuf on Monday, killing 15 guards and wounding two.
Ras Lanuf is also home to Libya’s largest crude oil export hub. It was damaged during the fighting and will need to be repaired before exports can reach full potential, the IEA said.
The challenge of restoring oil facilities like Ras Lanuf and the oil fields themselves is certainly surmountable, given the right personnel and equipment. However, “repair work could take much longer than assumed,” if Western and Libyan oil companies cannot get their staff back on the ground safely, the IEA said. “Security on the ground [must be] assured before major increases in production can be expected.”
The IEA also noted the uncertainty over whether a stable new central government will emerge:
“Divisions within the new leadership along tribal and regional lines may stall progress in creating a sustainable government necessary for renewed investment. There is evidently friction between the National Transitional Council and various rebel groups from Misrata and the western mountain region.”
In Iraq it took four years after the U.S. invasion to surpass pre-war oil production. The violence has subsided, but Iraq’s dysfunctional government remains an obstacle to faster industry growth.
Libya is not Iraq, but “the twin challenges of creating political stability and security on the ground…are formidable,” the IEA said.
Source: http://blogs.wsj.com
Despite Libya’s oil industry being almost completely shut down by the civil war, OPEC said the country could be producing 1 million barrels a day of oil again within six months.
Full pre-war output of around 1.5 million barrels a day could be reached within 12 to 18 months because, “Libya has some of the best experts in the oil industry,” OPEC said. “If the National Oil Company is able to bring them together to start production as soon as possible, that period may be even shorter.”
This contrasts sharply with the view of the International Energy Agency, which said Tuesday it expects the full restoration of Libyan oil production to take at least twice as long.
Why? Because the IEA is doubtful that many of Libya’s oil facilities are safe enough for those oil experts to get to work.
“With Colonel Gadhafi still at large…and pockets of loyalist resistance still putting up a fight, security remains uncertain,” said the IEA.
Mr. Gadhafi has been all but defeated, but the fighting is not over. His loyalists attacked Libya’s largest oil refinery near the coastal town of Ras Lanuf on Monday, killing 15 guards and wounding two.
Ras Lanuf is also home to Libya’s largest crude oil export hub. It was damaged during the fighting and will need to be repaired before exports can reach full potential, the IEA said.
The challenge of restoring oil facilities like Ras Lanuf and the oil fields themselves is certainly surmountable, given the right personnel and equipment. However, “repair work could take much longer than assumed,” if Western and Libyan oil companies cannot get their staff back on the ground safely, the IEA said. “Security on the ground [must be] assured before major increases in production can be expected.”
The IEA also noted the uncertainty over whether a stable new central government will emerge:
“Divisions within the new leadership along tribal and regional lines may stall progress in creating a sustainable government necessary for renewed investment. There is evidently friction between the National Transitional Council and various rebel groups from Misrata and the western mountain region.”
In Iraq it took four years after the U.S. invasion to surpass pre-war oil production. The violence has subsided, but Iraq’s dysfunctional government remains an obstacle to faster industry growth.
Libya is not Iraq, but “the twin challenges of creating political stability and security on the ground…are formidable,” the IEA said.
Source: http://blogs.wsj.com
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