A message
to foreign oil companies eager to pump Libyan oil again: don't expect business
as usual just yet. But once the war-torn nation puts its act together,
expect a roaring oil tiger.
Neither totally at war nor really at peace, Libya still faces an uphill
struggle to ramp up its production back to 1.6 million barrels a day--and to
bring Africa's largest oil reserves to European consumers.
In Tripoli, Martyrs' Square--the emblem of the revolution that toppled Moammar
Gadhafi last month--best encapsulates the transition the oil-rich country is
facing after his fall.
On a Thursday evening the square is a surreal cross between family fairground
and war zone: mothers push prams, and there is candy floss and bouncy castles. Also,
pick-up trucks with mounted machine guns cruise around, Kalashnikovs burst in
celebration and out of the blue, a man in djellaba pulls a gun out of his
pocket and casually fires in the air.
A quick visit to the offices of BP, in a leafy neighborhood of Tripoli,
confirms this unsettled atmosphere. In 2007, the British oil giant clinched its
largest oil exploration commitment anywhere in the world by pledging to invest
$900 million in Libya. Yet today, don't expect a manicured secretary at the
reception desk. Instead, a young man in greeny-yellow uniform greets the
visitor with an intimidating army knife laid in front of him.
With a deadly Texas refinery blast in 2005 and a Gulf of Mexico spill last
year, BP is well placed to know of the challenges of operating safely. But it
and the other oil companies preparing to return to Libya face an altogether
different task--rebooting an already hazardous industry in a volatile
environment. For a start, fresh reminders of the conflict are everywhere around
oil sites.
The road to the Eastern oil terminal of Brega looks like a scene out of Mad
Max--the arid landscape is only punctuated by the charred frames of army tanks.
Few cars take the turn to the oil facility and instead, most vehicles are
loaded with rebel fighters on their way to Gadhafi's last strongholds. At the
oil port, one oil tank has totally collapsed after being bombed and unexploded
ordnance can routinely be found at chemical plants.
That means foreign workers--on which the Libyan oil industry relies for many
technical skills--won't return en masse anytime soon. As for Libyan oil staff,
some are not making their way back to the office. At the local joint-venture of
Italy's Eni last week, the human resources department was pulling out the
records of a maintenance engineer. Suleiman al-Shatti died earlier in the day
fighting Gadhafi loyalists in the desert and the public relations department
was now busy printing a poster praising him as a "martyr."
Yet despite the last ditch resistance of Gadhafi loyalists and the mass circulation
of weapons, Tripoli feels surprisingly safe. There is nobody going through
pockets (picture one minute the same number of AK47s in the hands of the London
rioters). Neither is there the sort of descent into mass-scale strife witnessed
in Iraq.
Going forward, a democratic, transparent government will likely bring more
investment. Until now, Libya has never been able to reach its production target
of 3 million barrels a day but that may change once damage has been repaired. With
the new government's pledge to avoid corruption, "you will have
deals...that will be more profitable," says Mazen Ramadan, a spokesman for
the oil and finance ministry.
(This article has been posted on The Source, the Wall Street
Journal Online's site for European real-time analysis)