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Apprehensive: Postwar worries builds for oil firms in Libya

Apprehensive: Postwar worries builds for oil firms in Libya

Physical damage to oil facilities is not the only worry for oil firms who spent years courting Gaddafi to gain access to the country; in postwar Libya, they fear massive renegotiation of contracts and the digging up of old secrets.

August 17, 2011 11:38 by

Tripoli might be cut off and Libya’s war moving to its endgame, but analysts, oil companies and Western governments worry that the opposition, too, remains driven by internal division that could prompt new fighting, jeopardising both post-war recovery and the resumption of oil exports.

Oil firms  worry that even a relatively easy end to the war could simply set the stage for more chaos. At worst, they fear a collapse into a new and more complex civil war. At the very least, bureaucratic and political infighting could make a return to prewar business impossible.

“The place will not necessarily become more peaceful if Gaddafi goes,” said one Western risk consultant advising several major firms on Libya investments.

“You will have ex-Gaddafi people, the NTC and expats from the trading families returning,” he said.

“And they will be at each other’s throats.”

A July report from oil specialists Wood Mackenzie estimated that even after a possible overthrow of Gaddafi it could take around 36 months for Libya to resume full oil production of 1.6 million barrels per day, roughly 2 percent of global output.

Even with the swift lifting of international sanctions, many oil firms look likely to hang back from sending in teams to restart old projects or from investigating new ones.


“Even if Gaddafi does go it will be far from a smooth transition,” said one oil executive and security specialist.

“Remove a dictator and destroy his security apparatus and you are left with a scenario remarkably like Iraq, and look how long that has taken.” Saddam Hussein was overthrown more than eight years ago, but the country remains very troubled.

Western governments too also seem reluctant to plunge deeper into greater involvement in a post-Gaddafi Libya. Sources with knowledge of post-war planning say some has taken place, but it is largely limited to a relatively few civilian officials.

With Western powers exhausted by Iraq and Afghanistan and now dealing with economic crisis and perhaps even a rising risk of civil unrest at home, few believe they have the appetite for large peacekeeping missions that could last years.

While Libya does not have the same Sunni-Shi’ite sectarian division that rendered post-Saddam Iraq such a tinderbox, it does have complex tribal divisions that could fuel conflict.

Some suspect that even after a Gaddafi departure it could remain effectively somewhat divided into east and west along ancient provincial boundaries.

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1 Comment

  1. sara on August 17, 2011 12:15 pm

    Where do you get the idea that NATO is winning? Surprised a business journalist who takes care to get their financial facts right should so easily swallow mainstrream media propaganda.


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