Libya's oil production rising faster than expected

Libya’s interim Oil Minister Ali Tarhouni, bolstered by figures of the International Energy Agency, said his country should see a rise in production to 700,000 b/d by yearend, with full prewar production expected in June 2012.

“Things are going very well in the oil sector,” said Tarhouni Tarhouni’s figures were supported by the International Energy Agency, which said Libya’s oil production is resuming much faster than initially expected.

In September, IEA forecast that Libya would produce no more than 400,000 b/d by yearend, a figure that the North African country reached in October. Libya was producing more than 500,000 b/d by early November, the IEA said.

However, IEA said many constraints remain before Libya can restore its full prewar output of about 1.5 million b/d, with damage caused by heavy fighting around oil export terminals during the civil war likely to constrain output even if oil fields themselves have not been damaged.

IEA also noted the importance of US and foreign workers in the effort to increase the country’s output.

“The bulk of the restoration of production has been carried by local petroleum industry staff, with much of the foreign workforce still outside the country,” IEA said.

IEA added that the most costly and specialized repairs may have to await the arrival of workers from international oil companies—a point underlined by a spokesman of the Arabian Gulf Oil Co. (Agoco).

The Agoco spokesman said the firm’s production could return to its prewar level of 425,000 b/d by June 2012, but that the ramp-up is also facing challenges, including the lack of workers.

Production at the Hamadi and Beida fields is currently at 7,000 b/d, well below the prewar output of 30,000 b/d. The spokesman said that the return to normal was delayed because the fields’ cars were stolen, impeding the transportation of workers back to the site.

In addition, he said that international drilling contractors have also not sent back foreign staff, out of security concerns and because their rigs were looted.

Meanwhile, Tarhouni said the main challenge of Libya’s incoming government will be to establish functioning security services, not major economic decisions.

“I don’t anticipate that this transitional government will make major decisions” on the economy, Tarhouni said. I don’t expect, for example, that this transitional government will give new concessions for oil.”

Libya’s new government is being formed by Prime Minister Abdurrahim el-Keib, who expects it to be in place in 2 weeks or so. El-Keib’s government will remain in place until June 2012, the deadline for electing a 200-member national assembly that would choose a new prime minister.

Contact Eric Watkins at hippalus@yahoo.com.

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