Libya's Oil Production To Resume Shortly

Libya is poised to bring its major source of wealth back on line in a matter of days. Oil profits will be vital to a government that has much of its money tied up in frozen overseas assets. The Transitional National Council has said repeatedly it will honor all the contracts made with oil companies by the Gadhafi regime. Critics say those contracts were riddled with corruption.

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DAVID GREENE, Host:

It's MORNING EDITION, from NPR News. Good morning. I'm David Greene.

STEVE INSKEEP, Host:

And I'm Steve Inskeep. Here's a dilemma for Libya's new government: They need money. They need it now.

GREENE: And they have a chance to collect money, because Libya is a major producer of oil. But it will take a lot of work to bring back the country's production.

INSKEEP: To avoid confusion, the rebel Transitional National Council says it will honor all contracts made with oil companies by the Moammar Gadhafi's regime.

GREENE: But critics say those contracts were riddled with corruption and payoffs to members of the Gadhafi family and their cronies. NPR's Corey Flintoff reports.

(SOUNDBITE OF OIL REFINERY MACHINES)

COREY FLINTOFF: The Libyan oil refinery at Zowiya stands ready to start transforming crude oil into fuels, mainly diesel and gasoline. The workers at the plant just west of Tripoli are waiting for crude oil to fill the pipelines and tanks so that work can start. The plant director, Nasser Sharif, says it's just a matter of time now.

NASSER SHARIF: We are anxious to get back in operation, because we want to meet the local domestic, as well as we want everybody to know that we are back on stream. And also we want to contribute to the oil crisis in the world, because our crude is really wanted in your refineries.

FLINTOFF: The return of Libya's oil production could not only refill the country's coffers, but help relieve world oil prices, as well. But officials at Libya's National Oil Company say it will take time - around 15 months - to rebuild the country's oil production to pre-war levels of about 1.6 million barrels a day. Ali Tuweni says that's only a fraction of what the country could produce from reserves that are still to be explored.

He points to a map in his office at the Indian Oil Company, where he's the deputy director. It is a patchwork of colored rectangles where oil companies have bought the right to explore and drill.

ALI TUWENI: This is the concessions map of Libya.

FLINTOFF: Tuweni is a geologist who's worked for five major oil companies in Libya. But he says that under the Gadhafi regime, the contracting process was corrupted, usually with one of his sons taking a piece of the action.

TUWENI: Most of the big deals, you will find that one of his sons must be involved, either as a partner, or he will take some large sums of money as commissions.

FLINTOFF: And, Tuweni says, many of the payoffs were made in side deals that weren't linked to the main contracts. The leaders of the revolution, the Transitional National Council, have said repeatedly that existing business contracts will be honored, but critics say that process could reward the very people who plundered Libya's assets. Ali Tarhouni, the country's interim oil minister, says the council doesn't intend to let the contracts go without scrutiny.

ALI TARHOUNI: Respecting the contract doesn't mean that we don't monitor these contracts. Any sign of an attempt to deceive the people or the institution will be dealt with, and I hope dealt with firmly.

FLINTOFF: Tarhouni is an economist who's spent most of his career in exile, teaching at the University of Washington. He concedes that Libya won't be able to challenge or renegotiate contracts until it has the legitimacy of an elected government. Still, Ali Tuweni is optimistic. He says there's more than enough oil in the ground for Libya to make a new start.

TUWENI: We can release new bidding grounds, and companies can come on a transparent basis, and competitive - of course, there is opportunity for everybody.

FLINTOFF: When asked if a new surge of oil money won't tempt people to corruption again, Tuweni thinks not. He says that Gadhafi deliberately kept the salaries of Libyan oil workers far below the level of their foreign counterparts in order to squeeze every ounce of profit from a barrel of oil.

TUWENI: The reasons for corruption I hope is not there anymore. The low salaries, the mass enslavement of the population have produced such corrupt people. People didn't have the feeling that this money belongs to Libya. We all knew that this money belongs to Gadhafi.

FLINTOFF: Tuweni looks around his office, looted of its computers and equipment during the chaotic days of fighting in Tripoli. Despite all that, he says, he looks forward to getting back to work soon. Corey Flintoff, NPR News, Tripoli.

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