Wednesday, 20 April 2011

Libyan oil sector in a state of disrepair

In the key oil sector the Libyan regime has pursued a policy of destruction rather than preservation of the oil installations along the Gulf of Sirte. ENI announced on 14th April that it planned to transfer much of its oil stored in Libya to a safe Italian base as soon as possible. Their intention is to rescue some of their assets, not an easy matter, because the continuation of oil exports cannot be relied upon. Indeed, the revolutionary authorities have stated that further oil exports will be held back until repairs are effected at two oilfields – Mesala and Sarir.

Doubtless, legal wrangling will be acute between the two sides in determining which of the governments in Libya should be in receipt of revenues and taxes arising from oil exports. A strong lobby including the French, whose government has already recognised the Interim Transitional National Council (ITNC) as the legitimate administration, UK and Qatar favours retaining all payments frozen until such time as there is arbitration on the ownership of the oil shipped.

Throughout the country security is poor and few establishments are functioning at other than low capacity. For the moment, foreign concerns are sheltered while Libyan nationals are heavily engrossed in the political turmoil but almost inevitably life will become difficult depending on their support for or against Colonel Mu'ammar Qadhafi's regime.

The local staff in Tripolitania could turn antagonistic to foreign employers should NATO help to usher in new victories for the eastern Libyans.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2011 Menas Associates

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