While improvements in exports are encouraging, the unwillingness of the Libyan NTC to allow private security firms into Libya is acting as a brake on the country’s resurgent oil production, according to the following analysis from IHS.
Libya’s oil exports are expected to reach almost 350,000 b/d on average during November, according to expectations by the National Oil Corporation (NOC), a Reuters report based on interviews with NOC sources says.
The state company is expecting to sell 14 cargoes from mainly eastern oilfields, with subsidiary Arabian Gulf Oil Company (AGOCO) expected to market two more cargoes independently before handing over marketing activities to NOC by mid-November.
AGOCO started marketing occasional crude cargoes in the wake of the uprising against former Libyan leader Muammar al-Qadhafi from its base in the liberated east of the country.
The recent successful start of production—albeit at low levels—from the El-Sharara field in the south-west of the country and other fields in the west and south-west will, however, not hit international markets yet, as all production onstream so far and the expected increments for the rest of the year will be directed to the western 120,000-b/d Zawiya refinery to alleviate domestic fuel shortages and lower product imports.
The NOC has also said it hopes to restart Libya’s largest refinery in Ras Lanuf before the end of the year, with sources within NOC telling Reuters that this was an “over-cautious” estimate. NOC’s marketing will, according to the report, include crude from the al-Jurf, Abu Attifel, Amna, Sirtica, and Zueitina oilfields during November, while AGOCO will continue to market Sarir crude until the handover of marketing responsibilities.
In the meantime, the process of bringing back the large foreign labour contingents on which Libya’s oil and gas production depends faces some delays over Libyan government reluctance to allow IOCs to bring private security companies with them to far-flung oilfields, with the government saying that it is training its own oil security protection force to secure installations.
Significance: Libya’s oil recovery has so far surpassed expectations since the rebels’ mid-August definitive roll-back of the old regime’s forces from most of the country, but with the return of production from most fields now achieved, the country enters a new phase with new challenges.
To re-establish higher production levels, IOC experts and fuller workforces will be needed, meaning that not only must IOCs dare to fly in key personnel, but large numbers of workers at all levels will have to be persuaded to return to Libya.
With most of the looting during the conflict seemingly hitting residential compounds and office structures, the oil industry recovery in Libya looks technically easy, but still poses the logistical challenge of co-ordinating repairs before the bulk of the workforce can return.
For foreign workers to feel that security is adequately re-established, working with established security companies would seem beneficial, as opposed to a quickly established force of former rebels with—most likely—limited experience of dealing with foreign nationals and companies.
The reluctance to allow foreign security companies into Libya, while politically understandable, is therefore unlikely to help speed up production recovery and improve the perception of Libya’s safety as quickly as needed.
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