The fighting is not yet over in Tripoli, but the scramble to secure access to Libya?s oil wealth has already begun. Before the rebellion broke out in February, Libya exported 1.3 million barrels of oil a day. While that is less than 2% of world supplies, only a few other countries can supply equivalent grades of the sweet crude oil that many refineries around the world depend on. The resumption of Libyan production would help cut oil prices in Europe, and indirectly, gasoline prices on the East Coast of the US.
Western nations, especially the Nato countries that provided crucial air support to the rebels, want to make sure their companies are in prime position to pump the Libyan crude.
Foreign minister Franco Frattini of Italy said that the Italian oil company Eni ?will have a number 1 role in the future? in the North African country. Frattini even reported that Eni technicians were already on their way to eastern Libya to restart production. Libyan production has been largely shut down during the long conflict.
Eni, with BP of Britain, Total of France, Repsol YPF of Spain and OMV of Austria, were all big producers in Libya before the fighting broke out, and they stand to gain the most once the conflict ends. American companies also made deals with the Gaddafi regime, although the US relies on Libya for less than 1% of its imports.
But it is unclear whether a rebel government would honuor the contracts struck by the Gaddafi regime or what approach it would take in negotiating new production-sharing agreements with companies willing to invest in established oil fields and explore for new ones.
Even before taking power, the rebels suggested that they would remember their friends and foes and negotiate deals accordingly. ?We don?t have a problem with Western countries like Italians, French and UK companies,? Abdeljalil Mayouf, a spokesman for the Libyan rebel oil company Agoco said. ?But we may have some political issues with Russia, China and Brazil.?
Russia, China and Brazil did not back strong sanctions on the Gaddafi regime, and they generally supported a negotiated end to the uprising. All three countries have large oil companies that are seeking deals in Africa.
Gaddafi proved to be a problematic partner for international oil companies, frequently raising fees and taxes and making other demands. A new government with close ties to Nato may be an easier partner for Western nations to deal with. Some experts say that given a free hand, oil companies could find considerably more oil in Libya than they were able to locate under the restrictions placed by the Gaddafi government.
Oil analysts said it was likely that oil companies, particularly Total and Eni, would compete fiercely for contracts on the best oil properties, with their respective governments lobbying on their behalf. But first the rebels will have to consolidate control over the country. ?If you don?t have a stable security environment, who will be able to put their workers back in the country?? said Helima Croft, senior geopolitical strategist at Barclays Capital.
Oil experts caution that it could take as much as a year for Libya to make repairs and get its oil fields back to full speed, although some exports may resume within a couple of months. Since oil is far and away Libya?s most important economic resource, any new government would be obliged to make oil production a high priority. That would mean establishing security over major fields, pipelines, refineries and ports. The government would also need to quickly establish relationships with foreign oil companies, some of which consulted with both the rebels and Gaddafi through the conflict to hedge their bets.
Most oil companies involved in Libya declined to comment or said they would wait to see how the security situation evolved before sending personnel to Libya.