FACTBOX-Libyan oil output - how quickly can it restart?

Mon Aug 22, 2011 8:44am GMT
 

(Adds details, comment)	
    Aug 22 (Reuters) - Six months of civil war have left Libya's oil industry in chaos, with
fields that once pumped around 1.6 million barrels per day (bpd) deserted and export terminals,
pumping stations and pipelines damaged by fighting and sabotage.	
    But with rebel fighters now in the capital, Tripoli, and the battle for control of the
country probably in its final phase, industry executives and analysts say much of the country's
oil output could be resurrected within months if peace can be established quickly.	
    Although it will struggle to return to pre-war output for the foreseeable future, output of
as much as 1 million bpd could be feasible within months, they say.	
    Much will depend on the damage done to infrastructure and equipment in the last stages of
the fighting between forces loyal to Muammar Gaddafi and rebels, backed by NATO, trying to end
his 41 years of rule.	
    	
    An official working for Libya's Arabian Gulf Oil Company (AGOCO), which has been operating
the Sarir and Mesla oilfields under rebel control, said on Friday that output from its area
could resume within three weeks. 	
    "Our fields are under maintenance and we're still waiting for security," Abdeljalil Mayouf,
information manager at AGOCO told Reuters. "When the security is OK we will start. Perhaps two
or three weeks after the improvement in security. In three weeks maybe."	
    But even if Gaddafi avoids a bloody finish, his departure could usher in a new period of
instability and uncertainty. Analysts, oil companies and Western governments worry that the
opposition is riven by internal division, which could prompt new fighting after Gaddafi has been
removed from power, jeopardising both post-war recovery and the resumption of oil exports. 	
    War and other traumas in oil producing nations have typically had a lasting impact on
output. The speed of recovery in oil output depends crucially on how quickly international
companies with highly evolved skills can be brought in. 	
    Following are details of Libya's oil industry, production and assessments of how long it may
take to restore output.	
    	
    PRODUCTION AND EXPORTS	
    * Until the beginning of this year, OPEC member Libya was the world's 17th-largest oil
producer and Africa's third-largest. It holds the continent's largest crude oil reserves. It
sold about 85 percent of its exports to Europe.	
    * Oil production was equivalent to about 2 percent of global consumption, but fighting and
social disruption have cut this to less than 100,000 bpd, and exports have stopped altogether.
Many oilfields are dependent on foreign workers, who have almost all left the country.	
    * Most of Libya's oilfields are around the Sirte Basin, which contains around 80 percent of
its proven reserves and spans the front line between rebel and government forces. Many other key
parts of the country's oil industry are still held by forces loyal to Gaddafi.	
    * Libya has six major oil export terminals, listed with loading volumes for January from the
IEA. The condition of these facilities now is not clear:	
    - Es Sider (447,000 bpd)	
    - Marsa El Brega (51,000 bpd)	
    - Ras Lanuf (195,000 bpd)	
    - Tobruk (51,000 bpd)	
    - Zueitina (214,000 bpd)	
    - Zawiyah (199,000 bpd)	
    - other unspecified terminals (333,000 bpd)	
	
    DAMAGE	
    * Damage to infrastructure was reported to be light during the first few months of fighting
as both sides hoped to take full control of the country's oil industry. In March, officials said
the terminals of Ras Lanuf, Zueitina and Es Sider had suffered only minor damage during fighting
and some other oil towns had been left untouched.	
    * But damage has increased as fighting has continued and rebels have reported significant
damage to oil infrastructure this month. It has not been possible to independently confirm
reports of damage being done to oil installations, an accusation rebels have previously levelled
at government forces.	
	
    LIBYAN OIL COMPANIES 	
    * Libya's oil industry was formerly run by the state National Oil Co, which accounted for
around 50 percent of the country's output.	
    * Since fighting began, the Libyan National Council, with the help of Qatar has been able to
export a minimal amount of crude oil in the form of two partially laden tankers. The oil for
these cargoes was reported previously to have been in storage. One of these cargoes went to a
U.S. refinery and the other to Italy. No exports have been reported for several weeks.	
    * It is not clear how the oil industry will be structured after the war, but it may be
placed in the hands of AGOCO.                 	
    	
    RESTORATION	
    * A Reuters poll of 20 analysts and industry officials last month forecast it would take up
to one year to restore Libyan output to at least 1 million bpd but up to two years to get back
to pre-civil war levels of 1.6 million bpd. 	
    * The longest forecast for a full recovery of oil output came from David Wech, head of
research at Vienna-based consultants JBC Energy. He said a return to full output capacity could
take three to four years because significant investment in infrastructure would be necessary.	
    * Oil industry consultancy Wood Mackenzie said it would take around 36 months for the
country to recover its full production capacity, from whenever the crisis is resolved. It
estimates that substantial oil volumes could be back in the market by late 2012 if a resolution
is achieved by the end of 2011. But the recovery period will extend if production remains
shut-in for longer, as infrastructure continues to deteriorate.	
    * Samuel Ciszuk, senior Middle East & North Africa energy analyst with IHS Energy, said oil
output could theoretically be restored in 18 months but that this would be the most optimistic
scenario.	
    * "Once there is a degree of security for their personnel, it should not take too long for
the oil firms to get their workers back in. If the money's right they will go back," said Mike
Wittner, Societe Generale head of oil market research in New York. But it was difficult to
assess how much damage had been done to oil facilities during the war, he said. "No one really
has a clear idea of how much damage to the oil infrastructure there has been ... Anytime you
shut a field down quickly and run off in a panic there will be problems."	
    	
    FOREIGN OIL COMPANIES	
    * Foreign oil firms, essential for the quick resumption of production, have spoken to rebels
at length, but the future of existing contracts with Gaddafi's government is uncertain.   	
    * Italian producer ENI , present in Libya since the 1950s, is the biggest foreign
oil company there, producing 270,000 boed (barrels of oil equivalent per day) in 2010. Its
contracts are in force to 2042 for oil production, but it is not yet clear if they would be
honored by any future government.	
    * The total equity share of the following foreign companies -- many of which operated fields
on behalf of Libya's National Oil Co -- amounted to almost 500,000 bpd before the conflict
began. The legal status of contracts after the civil war will need to be clarified. The table
below is based on data from consultancy IHS Herold and Reuters reports: 	
 Company           '000 bpd    Libya      Libya       Libya       Status 
                               share of   share of    share of    (last 
                               total oil  total gas   oil & gas   reported)
                               (pct)      (pct)       (pct)       
 Eni      108         10.7       18          13.7        Unclear
 Wintershall       98.6        72.0       4           29.2        Shut
                                                        
 Total SA          60          4.3        0           2.7         Shut
                                                        
 Marathon  45.8        18.8       0           11.6        Unclear
 Conoco    45          3.2        0           2.1         Shut
 Repsol   36          8.3        0

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