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The article explores the current situation in Libya regarding the oil industry. The picture seemed bleak during the civil war. Since the outbreak from February 2011, the oil industry in Libya has been plunging downhill. The UN Security Council had banned oil exports from Libya to halt the supply of revenue towards the Qadhafi regime. Oil companies with huge stakes in Libyan oil were uncertain of profitable output from Libya. Foreign companies withdrew the oil workers working in their area which brought the oil industry to a standstill. The NTC or the ‘National Transitional Council’ has tried to appease the fear among oil companies by stating that Libya can return to its pre-war oil producing capacity in around a time period of 14 months. Around 95 percent of the Libyan revenue is gauged from oil and gas exports. Therefore, it is now crucial for the NTC to get Libya back on track for oil production and also to facilitate revenue for construction for a war ravaged nation. It is crucial for the survival of Libya that the foreign companies once more return to the Libyan soil. The International Energy Agency and OPEC are doubtful of the prediction that Libya can return to its pre-war producing oil capacity within a few months. Though OPEC as an organisation has recognised the NTC, it is important for the member nations to form bilateral relations to give credit to Libya internationally in the industry. The NTC states that the future oil contracts will be given on the basis of merit and fairness rather than political self interest as was the case in the regime of Qadhafi. However the reality seems opposite of what the NTC is claiming. Russian and Chinese oil companies have been largely ignored while the NTC is favouring European countries. This is not only because of their role in the Libyan conflict but also because Libya relies heavily on export markets of Europe. The oil sanctions on Libya were lifted at the Paris conference in September 2011. Libya’s oil assets worth $15 billion have been unfrozen. This has raised hope that Libya can soon resume its former oil producing capacity. How the situation in Libya affects prices on oil in the international market yet remains to be seen. Oil prices could either soar or lower depending on the situation in Libya. The counter measures of the OPEC play a crucial part in maintaining oil price in such a scenario. The EU, US and OPEC will play a crucial role in rebuilding Libya but success depends ultimately on the Libyan people and the NTC. The author is an experienced journalist in oil related fields, who regularly writes articles related to oil prices & indexes and crude oil including tips on investment in oil. Please visit oil.com for more details.
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