Libya Restoring Oil Output Rests With Companies

Restoring Libya’s oil production depends on how quickly international oil companies send teams back into the war-torn country, said Ahmed Jehani, minister for reconstruction in Libya’s new administration.

There was little damage to infrastructure, he said, and most of the required work involves restoring pressure to wells and cleaning sludge out of pipelines and storage facilities.

“Many of our fields are concessions held by international companies so they are the ones that have to do the work, we can’t do it for them,” Jehani said in an interview at a hotel in Paris, where he’s attending an international conference on Libya. “It depends on how fast they deploy back to the country.”

Some of the companies with major investments in Libya include Italy’s Eni SpA, France’s Total SA and Marathon Oil Corp. of the U.S., as well as Occidental Petroleum Corp., ConocoPhillips, and Hess Corp.

Jehani said he expected production to return to pre-war levels “within a reasonable time,” though he declined to make a prediction when this would be achieved. “As for the wells that are Libyan run, mostly in the east, we have good engineers and in the oil industry you can procure quickly.”

Shokri Ghanem, Libya’s former top oil official who defected earlier this year, doesn’t expect crude production to return to pre-conflict levels of more than 1.5 million barrels a day until the end of 2012, according to the Sept. 5 issue of Petroleum Intelligence Weekly.

“It could be faster than some people think,” Jehani said. Prime Minister Silvio Berlusconi of Italy, the largest buyer of Libya’s energy output, said last night that Italian oil company Eni SpA is aiming to re-open a gas pipeline between the two countries by Oct. 15.

‘Quite Quickly’

Total Chief Executive Officer Christophe de Margerie said yesterday the company’s offshore al-Jurf field could start “quite quickly.”

At yesterday’s Paris meeting, Libya’s National Transitional Council received pledges of help from the international coalition that helped topple Muammar Qaddafi. Today, Jehani and his team met with experts from the World Bank, United Nations and European Union to discuss what aid is needed following the six-month conflict to oust Qaddafi.

Jehani, a 65-year-old who worked 30 years at the World Bank in Washington and Baku, said it will take up to two months for a full assessment.

“Most of the damage that we know about is concentrated in Misrata and the Western mountains, but we don’t know about Bani Walid and Sirte, which are still under Qaddafi’s control,” he said. “In Tripoli, services came back pretty quickly. The damage to water and electricity wasn’t so bad.”

‘Friends of Libya’

The 60 nations at yesterday’s meeting, dubbed the “Friends of Libya,” agreed to release billions of dollars in frozen funds for humanitarian and reconstruction needs.

Jehani said he didn’t know how quickly money would be unblocked because some of it may require UN Security Council resolutions.

The U.S. has so far released more than $700 million from a total $1.5 billion in assets that have been unfrozen to help the NTC pay for fuel and civilian operational costs and salaries. France wants to release 1.5 billion euros ($2.1 billion) by the end of the week, said a French official who briefed reporters on the condition he not be named.

These early disbursements would be used solely for humanitarian needs, such as re-opening hospitals and schools, and not for infrastructure repairs, he said.

Libya’s annual government budget for salaries, operations, and subsidies is about $20 billion, he said.

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