From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Fri Aug 26 2011 - 16:24:24 EDT
Libya's Post Gaddafi Future: Who gets the Oil?
by John Daly
August 25, 2011
<http://oilprice.com/Energy/Crude-Oil/Libyas-Post-Gadhaffi-Future-Who-gets-t
he-Oil.html> OilPrice.com - Muammar Gaddafi's 42 year-old regime is in its
death rattle-maybe today, maybe tomorrow, his administration that has ruled
Libya with a quixotic and brutal hand is about to pass, in Trotsky's piquant
phrase, "into the dustbin of history", prompting the question, "What next?"
The glittering prize is Libya's 1.6 million barrels per day output of high
quality crude, which accounted for about 2 percent of global oil output
drawn from Africa's largest oil reserves, whose exports have been stymied
since the NATO-led campaign began six months ago. Projecting into the
future, analysts believe that Libya has reserves to sustain its previous
level of production for 80 years.
Who will eventually control this asset, with oil prices currently at roughly
$84 a barrel, generating an income of more than $12.6 million per day?
Italy's ENI?
France's Total?
Britain's BP?
U.S. companies?
Or, will China add Libyan future production to its string of acquisitions,
as it is already China's eleventh largest source of imports?
The crystal ball is murky indeed, but when the uprising against Gaddafi
began six months ago, according to the Chinese media, about 36,000 Chinese
were in Libya working on 50 projects.
Cautiously accepting the new reality, Chinese Foreign Ministry spokesman Ma
Zhaoxu said in a statement posted Monday on the ministry's website, "The
Chinese side respects the choice of the Libyan people. The Chinese side is
willing to work with the international community to play a positive role in
the reconstruction process of Libya in the future."
The key word here is "reconstruction," a noun conspicuously absent from any
statements by the NATO coalition members.
When the uprising against Gaddafi began, 75 Chinese companies had already
invested billions of dollars in Libya in infrastructure projects, including
oil, railway and telecoms projects. After the insurrection erupted in
February, China began a substantial land, sea, and air evacuation operation
of its nationals.
Benghazi-based Libyan rebel oil firm Arabian Gulf Oil Co. (AGOCO)
information manager Abdeljalil Mayouf cautioned, however, that China's
"softly, softly" approach to the uprising may initially cost it influence in
the new Libyan reality, saying, "We don't have a problem with Western
countries like the Italians, French and UK companies. But we may have some
political issues with Russia, China and Brazil."
While many analysts believe that Italy's ENI and France's Total could be
successful in post-insurrection Libya because of their countries' heavy
support for the rebels, it may all devolve down to a question of funding,
and given Beijing's pockets, despite its caution in its foreign policy, that
may well give China the edge.
Few promoting the prospects of Italian and French energy firms now remember
that just a couple of months ago the Libyan dissidents were literally
begging for financial assistance.
Furthermore, particularly in African endeavors, Chinese investment has
extended far beyond mere resource acquisition to providing infrastructure
essentials such as roads, schools, and health clinics, all of which will be
inshort supply in post-Gaddafi Libya.
Finally, certainly last but not least, China has no history of colonialism
in North Africa, unlike Libya (occupied by Italy, 1911-1947), Tunisia
(France, 1883-1956), Algeria (France, 1830-1962), Morocco (France,
1906-1956) and Egypt (Britain, 1882-1922.) While such issues are not
fiscally tangible, they may well influence the post-Gaddafi negotiations.
Waiting in the wings are U.S. and Canadian companies such as Marathon,
ConocoPhillips, Hess, Occidental and Suncor, which withdrew from Libya at
the onset of insurrection, as well as Russian companies, including oil firms
Gazprom Neft and Tatneft, which had projects worth billions of dollars in
Libya alongside Brazil's Petrobras. BP, which did not have production in
Libya before the war, said it was planning to return for exploration
efforts.
In the coming weeks, Libya's National Transitional Council will doubtless be
inundated with offers from various companies promoting their advantages.
Total and ENI have the inside geographical edge, being across the
Mediterranean, while American and British companies have cutting edge
technology to refurbish Libya's decrepit energy infrastructure.
But it is too early to count China out from the race-they do not come
burdened by history, and they come with deeper pockets than all their
competitors. The NTC, if it indeed represents the Libyan people, will not be
unswayed by such concerns, as the European rivals have yet to utter one of
the words most dreaded on Wall Street in considering profits,
"reconstruction." Whatever the shortcomings of Beijing's views of events in
Africa's largest oil producer, they do extend beyond mere corporate profits
to include rebuilding, which is likely to ensure them a place at the table.
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