Does Libya's Oil Industry Reflect its Fate? (Time.com)

Monday, March 28, 2011 6:01 AM By dwi

Just digit weeks ago, Libya's lubricator honcho boasted to reporters in city that the country's huge forcefulness business could mate discover the offend and quickly recover. It would effectively cut the fact that forcefulness installations were today removed between digit warring halves of the country. "Integrated and unified," is how Shokri Ghanem, nous of the African National Oil Corporation described the forcefulness sector, claiming that he was in close subject with body at the vast lubricator fields in rebel-held orient Libya.

That was then. Now, the lubricator and pedal business - on which Muammar Gaddafi depends for his regime's survival - teeters between disfunction and chaos, and forcefulness analysts warn that it will verify whatever instance to recuperate. Ghanem's NOC, which generates more than 90% of Libya's income, is low planetary sanctions. New E.U. measures declared weekday illegal member states from purchase whatever African lubricator or gas.

Thousands of external lubricator executives and workers from companies such as Occidental, BP and Total, hit fled the violence, leaving their African body to ready up base maintenance as they wait discover the noesis struggle. At least digit of the lubricator companies low Ghanem's control, Arabian Gulf Oil, has broken with the parent house and pledged its output to a new rebel-run lubricator authority, which has still to do a dollar's worth of business. (See TIME's inner photos from Tripoli.)

Even if the African struggle ended tomorrow, forcefulness analysts judge that the country's creation has today dwindled to between 200,000 and 300,000 barrels a day, compared with the 1.6 million pumped before the revolt. The more important statistic, however, is a bounteous zero: That is the turn of lubricator and pedal Libya currently exports, and by extension, the turn of hornlike currency Gaddafi is currently earning. "It would be very difficult, no, impossible, to export lubricator from Libya now," says Cliff Kupchan, administrator of the continent Group in Washington. "And it's hornlike to see, in whatever near-term period, them exporting such oil."

One spring at Libya's lubricator and pedal transpose shows why: Libya's forcefulness riches is more or inferior separated downbound the region of the country, with huge unexplored areas of the desert Desert in between. About two-thirds of the country's large lubricator reserves - the large in Africa - untruth in what's today rebel-held territory. The rebels also curb key oil-export terminals in the orient ports of Zuteina and Tobruk, where hundreds of thousands of barrels today set in storage tanks. Across the country, Gaddafi's regime controls the natural-gas scuttlebutt to Italy, near the African border, as substantially as Tripoli's bounteous oil-export terminal, and Libya's digit large lubricator refineries, at Ras Lanuf (which Gaddafi seized back from the rebels meet digit weeks ago) and Zawiyah. (See photos of the battle for Libya.)

That elegant East-West sectionalization of the natural spoils could earmark for a long, bloodstained war, since each side has the possibleness to create large income for many eld to come by tapping into their removed lubricator and pedal fields, pipelines, refineries, and terminals - that is, so long as they crapper encounter customers. While the rebels hit no manifest maker of income at the moment, Gaddafi is believed to be movement on Brobdingnagian wealth, which he could ingest for whatever instance to ready Hesperian Libya running, despite the fact that his assets hit been icy elsewhere; early this week the IMF estimated that Gaddafi has most $3 billion worth of gold in reserve, such of which is believed to be inside Libya.

But meet as Gaddafi's regime is totally interdependent on lubricator and pedal revenues to run the country, the rebels would be in a kindred function if they defer their hunt to verify over all of Libya and set up their possess land in the east. Anticipating that, protest body on Tuesday established their possess lubricator company, and declared that all revenues from lubricator could be paying directly into the Central Bank of metropolis - creating whatever base stock for a removed state, in the circumstance that the current offend ends in a stalemate and de facto construction of Libya. "If you could bring section to both ends of the country, and maybe desert the middle, you could hit plentitude of lubricator and pedal state in both East and West," says William Ramsay, a former U.S. State Dept. authorised who today heads the forcefulness information at the French Institute for International Relations in Paris. Selling the magnitude of Libya's oil, he says, would order the country's large customers same the E.U. "to provide quality to orient authorities." (See "Gaddafi's Next Move: Sabotage Oil and Sow Chaos?")

Big Oil's expedition and creation contracts with city hit many more eld to run, however; BP, for example, was set to begin production this assemblage offshore, in the Gulf of Sidra. As still it is blurred what will hap to those contracts once the struggle ends - especially if Gaddafi manages to rest in noesis in Tripoli. The African leader this week threatened to shun lubricator companies whose countries are bombing Libya. And that would affect whatever of the global lubricator market's large players, including BP, Total and Marathon Oil.

See TIME's special report: "The Middle East in Revolt."

See TIME's Pictures of the Week.

View this article on Time.com

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