Wintershall, other firms crank up Libyan oil output

Wintershall Holding GMBH, which shut down its Libyan desert oil fields in February for security reasons, has resumed production as agreed with Libyan National Oil Corp. Wintershall joins several other international oil companies that have recently resumed operations in the war-torn country.

Wintershall produced 100,000 b/d from eight fields prior to the outbreak of civil war. “We reached a production level of about 20,000 b/d shortly after beginning operations,” said Wintershall Chief Executive Officer Rainer Seele.

The German firm said installations at its fields, which lie on the C96 and C97 blocks 1,000 km southeast of Tripoli in the Sirte basin, were undamaged, having been guarded and maintained by Libyan personnel. Its transportation systems also, Wintershall said, are thought to be intact.

This optimistic view was shared by Total SA Chief Executive Christophe de Margerie, who said his firm’s return to Libya was “all quicker than expected” in terms of logistics and oil facilities.

Claudio Descalzi, head of exploration and production for Eni SPA, meanwhile, said, “We expect 90-95% of our equity oil production to be restored by the end of the first half next year.”

Libya’s Arabian Gulf Oil Co. said it expects to produce oil at its full capacity of 425,000 b/d by February 2012, after it resumes production at some fields and boosts output at others.

Currently, production has been delayed by about a week at the firm’s Hamada and Beda fields due to logistical and technical problems, according to a company spokesman. The two fields, which each produce about 10,000 b/d, had been expected to resume output on Oct. 17.

“We will reach full capacity in the fields when we overcome all the problems, some of which are minor,” said the spokesman, who said there were leaks in branch pipelines and some missing equipment but that the operation equipment was left intact.

Speed, cost, timing

Debate continues over the speed, cost, and timing of Libya’s recovery to reach the prewar production level of 1.8 million b/d.

“Oil production will come back to the previous level in 15 months or less,” said Abdalla Salem El-Badri, secretary general of the Organization of the Petroleum Exporting Countries. “There is not much damage to the oil facilities and companies are really moving fast,” he told delegates at the Oil & Money Conference 2011 in London last week.

However, the International Energy Agency adopted a more cautious approach, saying, “So far, there are still many conflicting reports about the state of the fields and infrastructure which need to be clarified.”

In addition to the state of fields and transportation systems, Libya also faces delays due to the need to bring skilled laborers back to the country, a point stressed by Samuel Ciszuk, an analyst at IHS Global Insight.

“Libya's reliance on tens of thousands of foreign oil engineers, geologists, and technicians, mostly from neighboring Arab states, south Asia, and China, will be an obstacle to a quick recovery,” said Ciszuk, adding, “Attracting these workers back will invariably take time.”

Looking farther down the road, the head of France’s trade delegation Ubifrance told Reuters that it would cost an estimated $30 billion to increase Libya’s oil production to 3 million b/d by 2015.

“We estimate that today there are $30 billion worth of investments in hydrocarbons needed between 2011-15 to take Libyan oil production to 3 million b/d,” said Christophe Lecourtier, Ubifrance director general, on a visit to Tripoli.

Contact Eric Watkins at hippalus@yahoo.com.

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