International oil companies are preparing to resume exploration, drilling, and production in Libya after Monday’s near collapse of the Gadhafi regime. Most of them withdrew their expatriate staffs when fighting began in February, but now note that most of Libya’s oil installations appeared largely undamaged from months of warfare and are eager to return.
“Our people are ready to go back to work when the conflict is resolved. From that point forward, they can return to production in four weeks or less,” said Carmen Herrero, a spokeswoman in Madrid for the Spanish oil company Repsol.
Repsol had operated in Libya under a joint venture with the National Oil Corp. of Libya and was producing about 35,000 barrels of oil per day at the El Shararah oil field in the central Libyan desert near Ubari.
Years before the outbreak of conflict in Libya this year, a tug of war between American, Russian and Italian oil corporations was taking place, according to secret diplomatic cables released by WikiLeaks. A deal between the Italian oil company, Eni, and the Russian oil company, Gazprom, was on the radar of the Americans who plotted to foil it, signaling the major interests various world players had in Libyan oil.
Eni was extracting about 196,000 barrels per day of oil from Libyan fields before the war, additionally producing large quantities of natural gas. American companies ConocoPhilips and Marathon each had invested about $700 million in Libyan oil in the years leading up to the conflict. Marathon has already begun discussions with the rebel National Transitional Council on the condition of facilities in the Waha field it operates jointly with Libya’s national oil company.
The British oil company British Petroleom had begun work on a $900 million exploration program there before pulling out in February due to violence. They have not yet entered into any commercial transactions with the Transitional National Council, according to a statement.
International companies for years had reportedly had trouble with doing business with Gadhafi. According to WikiLeaks diplomatic cables, the Libyan leader demanded tough contract terms, sought large bonus payments up front, and was upset that he was not getting more U.S. government respect and recognition for earlier concessions. According to some WikiLeaks cables, he pressured the oil companies to influence U.S. policies.
It remains unclear at this point, as do most things going forward with the rebel council, whether or not business will find smoother relations with whomever governs Libya after Gadhafi. For now, despite continuing violence and instability in Libya, they are eager to return to conduct business.
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