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.
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.
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