The Scramble for Access to Libya’s Oil Wealth Begins
Before the rebellion broke out in February, Libya exported 1.3 million barrels of oil a day. While that is less than 2 percent of world supplies, only a few other countries can supply equivalent grades of the sweet crude oil that many refineries around the world depend on. The resumption of Libyan production would help drive down oil prices in Europe, and indirectly, gasoline prices on the East Coast of the United States. Western nations — especially the NATO countries that provided crucial air support to the rebels — want to make sure their companies are in prime position to pump the Libyan crude. Foreign Minister Franco Frattini of Italy said on state television on Monday that the Italian oil company Eni “will have a No. 1 role in the future” in the North African country. Mr. Frattini even reported that Eni technicians were already on their way to eastern Libya to restart production. (Eni quickly denied that it had sent any personnel to the still-unsettled region, which is Italy’s largest source of imported oil.) Libyan production has been largely shut down during the long conflict between rebel forces and troops loyal to Libya’s leader, Col. Muammar el-Qaddafi. Eni, with BP of Britain, Total of France, Repsol YPF of Spain and OMV of Austria, were all big producers in Libya before the fighting broke out, and <a href="http://www.cheapstraightenersghd2011.com/limited-edition-precious-ghd-iv-styler-p-5745.html"><strong>ghds straighteners cheap</strong></a> they stand to gain the most once the conflict ends. American companies like Hess, ConocoPhillips and Marathon also made deals with the Qaddafi regime, although the United States relies on Libya for less than 1 percent of its imports. But it is unclear whether a rebel government would honor the contracts struck by the Qaddafi regime or what approach it would take in negotiating new production-sharing agreements with companies willing to invest in established oil fields and explore for new ones. Even before taking power, the rebels suggested that they would remember their friends and foes and negotiate deals accordingly. “We don’t have a problem with Western countries like Italians, French and U.K. companies,” Abdeljalil Mayouf, a spokesman for the Libyan rebel oil company Agoco, was quoted by Reuters as saying. “But we may have some political issues with Russia, China and Brazil.” Russia, China and Brazil did not back strong sanctions on the Qaddafi regime, and they generally supported a negotiated end to the uprising. All three countries have large oil companies that are seeking deals in Africa. The European benchmark price for oil fell moderately on Monday on speculation that Libyan oil production would quickly begin rising again. Brent crude oil prices initially dropped more than 3 percent, but ended New York trading basically flat at 108.42. The American benchmark crude, which is less sensitive to events in the Middle East, rose <a href="http://www.uggsoutletssale.com/"><strong>ugg outlets</strong></a> 2.01, to 84.42. Colonel Qaddafi proved to be a problematic partner for international oil companies, frequently raising fees and taxes and making other demands. A new government with close ties to NATO may be an easier partner for Western nations to deal with. Some experts say that given a free hand, oil companies could find considerably more oil in Libya than they were able to locate under the restrictions placed by <a href="http://www.straightenerghduk.com/2010-new-ghd-butterfly-pink-p-5725.html"><strong>ghd price</strong></a> the Qaddafi government. Oil analysts said it was likely that oil companies, particularly Total and Eni, would compete fiercely for contracts on the best oil properties, with their respective governments lobbying on their behalf. But first the rebels will have to consolidate control over the country. “If you don’t have a stable security environment, who will be able to put their workers back in the country?” said Helima Croft, senior geopolitical strategist at Barclays Capital. The civil war forced major oil companies to withdraw their personnel, and production plummeted over the last several months to a minuscule 60,000 barrels a day, according to the International Energy Agency. That would account for roughly 20 percent of the country’s normal domestic needs. The rebels were able to export a modest amount of crude that was stored at ports and sell it for cash on the international markets through Qatar. Oil experts caution that it could take as much as a year for Libya to make repairs and get its oil fields back to full speed, although some exports may resume within a couple of months.
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