December 8, 2023

Forecasts Differ on Restoring Libyan Oil Output

Abdalla Salem el-Badri, secretary general of the Organization of the Petroleum Exporting Countries, said Libya could reach prewar levels by the end of next year. But Shokri Ghanem, the former chairman of Libya’s state-run oil company, said a return to full production could take until the end of 2013.

“The question is whether the war is ended or not,” Mr. Ghanem said, underlining the risks to oil supplies in the aftermath of revolutions that have swept North Africa and the Middle East. “The picture is still unclear,” he said, referring to the situation in Libya since the ousting from power of Col. Muammar el-Qaddafi.

The two representatives made their remarks at the Oil Money conference, which is jointly organized by The International Herald Tribune and Energy Intelligence, in London.

Mr. Ghanem, who was the top oil official in Libya until earlier this year, said the country could produce 550,000 barrels of oil a day by the end of this year and a million barrels a day by next June. But he said Libya still could require up to two years to reach prewar production levels of 1.6 million barrels a day — and only on the condition that oil fields were adequately secured.

Libya is a relatively small producer compared with other OPEC countries, but it is an important supplier of the light sweet crude that many refineries around the world depend on.

Total of France, Eni of Italy and Repsol of Spain are among the companies with significant stakes in Libya.

Mr. Ghanem said it would be difficult for the new authorities to offer more generous terms to foreign investors than the previous government, but he said renegotiations “could happen.”

He said Brega and Ras Lanouf were among the sites that had been badly damaged, partly because of widespread looting. He said that contractors’ quarters and metering instruments had been damaged, and that spare parts and fleets of four-wheel-drive vehicles were stolen.

He estimated that it would cost “a few” billion dollars to repair damaged sites and replace equipment.

Underlining the caution among executives about Libya, Andrew Gould, the chief executive of Schlumberger, a major oil services company, said he would need to deploy about 100 security personnel in Libya to resume activities there this year.

Mr. Gould said Schlumberger still employed a far larger number of security personnel — more than 400 — in Iraq.

Mr. Ghanem said, “Now we are in the same boat” as Iraq, adding that the security situation was being further complicated by upheavals in neighboring countries, including Algeria, Chad and Niger.

Mr. Badri, who was chairman of the Libyan National Oil Corporation from 2004 to 2006, appeared to take a more upbeat view of the situation there. He insisted that production facilities were not seriously damaged and that the country had technicians to revive the industry.

Mr. Badri also said he was optimistic about avoiding a rerun of a rare public split within OPEC in June, when Iran and five other countries rejected a proposal to raise output by 1.5 million barrels a day after turmoil in Libya shut down production.

“In December, we’ll come up with a positive ending,” said Mr. Badri, referring to the next meeting of OPEC oil ministers in Vienna.

Mr. Badri said members were making sufficient investments to replace wells that were becoming depleted and to keep up with demand in countries with fast-growing economies, like China.

He said OPEC member countries had plans to undertake 132 projects worth $300 billion to increase gross production capacity by 21 million barrels a day by 2015 or 2016.

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Obama Sets Goal of One-Third Cut in Oil Imports

With oil supplies from the Middle East now pinched by political upheaval, and with calls growing in Congress for expanded domestic oil and gas production, the president referred in his speech to a similar run-up in energy prices in 2008.

“Now here’s the thing — we’ve been down this road before,” Mr. Obama said. “Remember, it was just three years ago that gas prices topped $4 a gallon. I remember because I was in the middle of a presidential campaign.”

He continued: “Because it was also the height of political season, so you had a lot of slogans and gimmicks and outraged politicians, they were waving their three-point-plans for two-dollar-a-gallon gas. You remember that: ‘Drill, baby, drill’ and all of that. And none of it would really do anything to solve the problem.”

Saying there were no quick fixes to the nation’s oil addiction, Mr. Obama went on to propose a mix of measures, none of them new, to wean the nation off the barrel.

He called for a fuel-saving strategy of producing more electric cars, converting trucks to run on natural gas, building new refineries to brew billions of gallons of biofuels and setting new fuel-efficiency standards for vehicles. Congress has been debating similar measures for years.

“The only way for America’s energy supply to be truly secure is by permanently reducing our dependence on oil,” Mr. Obama said. “We’re going to have to find ways to boost our efficiency so that we use less oil. We’ve got to discover and produce cleaner, renewable sources of energy that also produce less carbon pollution that is threatening our climate. And we have to do it quickly.”

He pointed out that since the first Arab oil embargo in 1973, the nation had a tendency to panic when gasoline prices rise, and to fall back into old fuel-guzzling habits when prices recede.

“We cannot keep going from shock when gas prices go up to trance when gas prices go back down,” he said. “We can’t rush to propose action when prices are high, then push the snooze button when they go down again. We can’t keep doing that. The United States of America cannot afford to bet our long-term prosperity and security on a resource that will eventually run out.”

More than half of the oil burned in the United States today comes from overseas and from Mexico and Canada.

The president repeated his assertion that, despite the frightening situation at the Fukushima Daiichi reactor complex in Japan, nuclear power would remain an important source of electricity in the United States for decades to come.

“It’s important to recognize that nuclear energy doesn’t emit carbon dioxide in the atmosphere,” he said, noting that nuclear power now provides about one-fifth of domestic electricity supplies. “Those of us concerned about climate change know that nuclear power, if it’s safe, can make a significant contribution to the climate change question. And I’m determined to ensure that it’s safe.”

He said he had directed the Nuclear Regulatory Commission to undertake a comprehensive safety review of the 104 reactors operating in the United States.

He also responded to members of Congress and oil industry executives who have claimed that the administration had choked off domestic oil and gas production by imposing costly new regulations and by blocking exploration on millions of acres of potentially oil-rich tracts on shore and off.

He noted that the administration had put in place new safeguards after the Deepwater Horizon explosion and oil spill in the Gulf of Mexico last April, and had begun to reissue drilling permits that had been stalled while the industry demonstrated that it could safely resume operations. And he noted that the energy industry already had leases covering vast areas that it was not using.

“So any claim that my administration is responsible for gas prices because we’ve shut down oil production — any claim like that is simply untrue,” the president said. “It might make for a useful political sound bite — but it doesn’t track with reality.

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