Libya oil chief optimistic output will return to normal within 15 months
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TRIPOLI: Libya’s oil production stands at about 25 percent of its prewar levels but could return to an output of 1.6 million barrels per day in about 15 months, the country’s oil chief said Sunday.
The OPEC country’s output all but stopped during the months of fighting to oust Moammar Gadhafi and oil officials have struggled to get operations back on line to earn much-needed revenues as the country tries to rebuild.
Nuri Berruien, chairman of the state-run National Oil Corp., also told the Associated Press in an interview Sunday that the transitional leadership would honor contracts from the Gadhafi era, including with Russian and Chinese companies even though their countries were slow to support the uprising against Gadhafi. But, he said, it was up to the next government to decide on new licensing rounds or agreements.
“New licensing and new agreements should wait until we have proper government and it may take awhile,” he said. “But any company we have an agreement with, we just have to honor at least during the interim period or the transitional period.”
Libya’s new rulers have said they will declare liberation after Gadhafi’s hometown of Sirte is captured and elections are expected to take place about eight months after that.
Many companies are eager to tap into the country’s wealth of natural resources. The Mediterranean coastal nation sits atop Africa’s largest proven reserves of conventional crude, and with a population of only 6 million, raked in $40 billion last year from oil and gas exports. The crude is known for its high quality and suitability for European refineries.
“The market is thirsty for the Libyan crude,” Burruien said.
Berruien said Libya is currently producing about 390,000 barrels per day, mainly from fields in the eastern half of the country, and output would rise to 1 million barrels per day within four to five months.
When asked how long it would take to resume prewar production levels, he said, “let’s say as a conservative figure to be on the safe side. Not more than 14 to 15 months.”
Fighting against Gadhafi loyalists is still taking place on two major fronts, including his hometown of Sirte, but energy analysts said they were encouraged that militia violence had not broken out.
Jamie Webster, who monitors Libya for the Washington-based consultancy PFC Energy, said that as long as security conditions remain relatively stable, “we do see an expectation that these light sweet barrels should be back on the market by the end of next year at close to prewar levels.”
He added that less than expected damage had been reported to the fields and infrastructure, and international oil companies were eager to return. “Our forecast is much more bullish than it was two months ago,” he said.
Berruien said the main challenges in the field right now were from corrosion after the long stoppage of production and that most of the damage was to infrastructure after looters carried off vehicles and other equipment.
He said some production equipment such as small generators had been taken, especially in the area controlled by Mellitah Oil & Gas, a partnership between Italy’s Eni SpA and the National Oil Corp. Looting most recently had occurred in the southwestern fields, around the still-volatile area of Sabha, he said.
“But now it’s under control because the company people went there with guards to make an assessment and very soon these fields will come back on production … probably within two weeks,” he said.
Libyans have led the effort to resume oil production, but Berruien said service companies and international firms were poised to come back as soon as possible.
Eni, which was the largest foreign producer in Libya before the civil war broke out, and the French energy company Total already have resumed partial oil production.