Can Oil Fuel Libya's Reconstruction?

Rebuilding Libya will be complex, but the Libyans should be able to pay for reconstruction with their oil. Host Audie Cornish talks with John Hamilton, a Libya expert at Cross Border Information, about the current state and future of Libya's oil industry.

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AUDIE CORNISH, HOST:

The U.N. Security Council has terminated its authorization of foreign military operations in Libya. And as of tomorrow night, NATO's bombing campaign there will be over. Libyans now have to focus on the future, which includes reconstruction after the devastation of war. Some of the money for that effort may come from the country's oil wealth. To assess the state of Libya's oil industry, we called John Hamilton in London. He's a specialist in North African energy for Cross Border Information. It's a publishing and research company that focuses on African and the Middle East. John Hamilton, welcome to the program.

JOHN HAMILTON: Thank you.

CORNISH: So, to begin, how realistic is it for Libya to rely on oil and the oil industry getting back up to speed there in order to fund their reconstruction effort?

HAMILTON: I think that at the outset, oil revenues may not pay as great a role as some of the funds which have been unfrozen in foreign assets belonging to Libya's sovereign wealth fund, the amounts which the National Transitional Council have from past oil sales is probably greater than what they can earn right now. The other issue is that money, which that they're currently earning from oil exports, at least part of that is having to go to repay debts which they built up during the past six months.

CORNISH: What is the situation now in terms of oil production and what needs to be done to restore it to pre-revolution production levels?

HAMILTON: We estimate that Libya is probably now producing a little bit over 300,000 barrels a day. That compares to 1.6 million barrels a day that it was producing before the revolution. They've got up to this level quite quickly, but extra 100,000 barrels that they need to add now to get back to where they were is going to be more difficult and more expensive because they need to get security in place. They need to replace a huge amount of capital equipment, which was looted or destroyed during the revolution at the fields.

CORNISH: Is there any sense of how long it will take to resume full production?

HAMILTON: Yes. The best estimates think that it could take about two years to do that. The worst estimates say five years but that seems to be unduly pessimistic.

CORNISH: What about the security of the transportation hubs and the ports?

HAMILTON: Yes, certainly. Libya has about six oil export terminals, and half of them are currently working - the ones in the very west and the very east of the country. The most important terminals are the three which are inside the gulf of Sirte, which is a central part of Libya's coast. And those are the ones which Gadhafi's forces had control of almost through the entirety of the conflict. And there have been many reports that they've been heavily mined, and most of them have suffered quite a lot of damage during the conflict and will need quite a lot of investment before they can actually be used to export from. That's going to take some months, at least to overcome. But in terms of the actual security and the places apart from the mines, I think that they're now fairly stable.

CORNISH: John Hamilton. He is the London office director for Cross Border Information Publishing. He writes for the African Energy Newsletter. John Hamilton, thank you so much for talking with us.

HAMILTON: Thank you.

(SOUNDBITE OF MUSIC)

CORNISH: You're listening to NPR News.

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