Wednesday, 25 July 2012

Libya: Oil production on the up

Austria's OMV has reported a rapid recovery of its Libyan oil production following the end of the revolution. It reached 25,000 b/d in the first quarter of 2012 and the pre-war rate of 34,000 b/d in the second quarter.

National Oil Company (NOC), its Agoco subsidiary and Wintershall are working together on a €31.4 million project to construct a 100,000 b/d capacity 55km crude oil pipeline which will help boost oil exports The installation is scheduled to be completed in August and the project as a whole will be handed over to Agoco in March 2013.

Repairing the Libyan economy is proving more difficult than forecast. Although the damage to the oil infrastructure is not particularly severe, it is geographically widespread and the reconstruction activity has been fragmented. According to industry sources the final return to the 1.6 million b/d pre-war levels of oil output could take until the end of 2012. Meanwhile, the political situation has been subject to slow improvement but security problems still remain. Outside the oil sector there is talk of large scale investments that could be made in the short term which would provide an enormous boost but only if the IOCs are convinced, unlike Shell, of the long-term profitability of their Libyan oil operations.

This week, in an example of the way the weak international market is impacting on the Libyan oil industry, an NOC spokesman announced that the August official selling price of its bench mark Es Sider crude is at the lowest level in almost three years. It was cut by US$1.60 a barrel to a discount of US$1.30 to North Sea Dated Brent.

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

© 2012 Menas Associates

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