the U.S. drawdown from Iraq left that country's vast network of oil and
gas pipelines vulnerable to damage. Some pipelines were sabotaged,
leading to supply disruptions and requiring the burial of some
above-ground pipelines to decrease their vulnerability to attack.
It's not yet clear what damage the six-month uprising has done to Libya's
oil and gas infrastructure, but a post-Qaddafi Libya might not ensure
its safety, Book said. "The pipelines will be the most vulnerable
point," should there be significant fighting among rebel factions.
Libya's economy reliant on its high-quality oil and gas reserves, the
North African nation's next government undoubtedly will utilize its
lucrative natural resources. "Whoever is in power is going to want to
bring the [oil] companies back," Frank Verrastro, senior vice president
and director of the Energy and National Security Program at the Center
for Strategic and International Studies, told National Journal.
"just getting Libyans to get along with Libyans" will be one hurdle,
another will be to reassure foreign companies that the nation is stable
enough for them to resume working in Libya.
Major oil companies
from Italy, France, Germany, and Spain have drilling operations in
Libya, with 85 percent of the country's oil and gas going to those
countries, according to the International Energy Agency. Those
operations were suspended earlier this year when Libya's civil war broke
Italian oil company Eni SpA, the largest foreign producer
in Libya, and other firms will be asking themselves: "Is this a place
you can send people to work?" Book said. Thirteen percent of Eni SpA's
revenue came from Libya before the conflict began in February. In July,
the company cut its full-year production target because of the
disruption in Libya.
Energy consultant Wood MacKenzie said this
week that even after hostilities end, it could take three years for
Libyan oil production to return to pre-conflict levels. But others are
Verrastro predicted that Libyan production could come back up by 400,000 to 500,000 barrels a day within six months.
Samuel Ciszuk, senior Middle East and North Africa energy analyst with
IHS Energy, said that barring any serious damage to infrastructure--and
assuming some degree of political stability--Libyan production could be
up to 1.2 million barrels a day by this time next year. Depending
on policies and infrastructure, the country could potentially produce
250,000 to 300,000 barrels a day within three months, he added. "It will
surely ease a lot of the worries" over crude supply, Ciszuk said.
February, Libya exported about 1.6 million barrels of oil a day. While
that's only about 2 percent of the world's oil production and a
virtual pin drop compared with production from its 11 partners in the
Organization of Petroleum Exporting Countries, the value of Libya's oil
lies in its quality, not its quantity.