Oct. 20 (Bloomberg) -- The death of former Libyan leader Muammar Qaddafi in his home town of Sirte will expedite the nation’s efforts to revive crude output to normal levels, the chairman of state-run National Oil Corp. said.
“This will help in getting a lot of fields back into production as soon as possible,” Nuri Berruien said today in a telephone interview from Libya. “Now that Sirte is liberated, people can move quickly. People can go to the fields that are in the west.”
Gunfire echoed across Libya’s main cities today as crowds poured into streets to celebrate the capture and death of Qaddafi, who ruled the North African nation for 42 years. The fall of Sirte, located along the main highway linking the eastern and western regions, will allow oil workers and engineers back to the fields, Berruien said.
Libya, holder of Africa’s biggest crude reserves, seeks to restore production to about 1.7 million barrels a day within 15 months, after output dwindled to almost nothing amid the rebellion that broke out in February. The collapse in exports contributed to prices rallying as much as 34 percent in London earlier this year and prompted the International Energy Agency to announce in June a global release of emergency stockpiles for the third time in the agency’s history.
Supply to Rebound
Libyan output is slowly rising after it plummeted from 1.6 million barrels a day in January. Companies including Eni SpA, Libya’s biggest foreign investor, and Total SA have returned as fighting ebbed. Supply may rebound to 750,000 barrels a day by the end of the year from 430,000 barrels a day now, Berruien said.
International companies including Halliburton Co. and Schlumberger Ltd. may be more willing to send staff back to the country as it returns to “normalcy,” the NOC chairman said.
“This will have a positive impact that is not necessarily immediate, but we could see the impact after a week or so,” said Abdeljelil Mayuf, the head of the information department at Arabian Gulf Oil Co., a state-run company in Benghazi that had quickly joined the rebel side.
“This will encourage foreign oil companies that were reluctant in the past to come back to Libya,” Mayuf said by phone from Benghazi. “These companies are looking for complete security. Some companies, however, may still be reluctant now because they fear what could come next, but I don’t think anything will happen. This is the end of Qaddafi’s regime.”
OPEC, Security Concerns
A speedy return of Libyan exports may cause Saudi Arabia and other members of the Organization of Petroleum Exporting Countries to consider reining back supply when the 11-nation group meets on Dec. 14 in Vienna.
Even so, analysts at BNP Paribas SA, Barclays Plc and JBC Energy GmbH are less convinced Qaddafi’s killing will accelerate supply because security in the country remains uncertain.
“The factors that govern this lie elsewhere,” Harry Tchilinguirian, BNP’s London-based head of commodity markets strategy, said in an e-mail. “Alongside the necessary work required to address damaged infrastructure, political stability will be key in shaping the future of Libya’s oil supply.”
While production has recovered to 400,000 barrels a day, a full resumption is unlikely before the end of 2012, he said.
David Wech, an analyst at consultant JBC, said by phone from Vienna that output won’t reach 1 million barrels a day until the end of 2012 and “will take a couple of years to return to pre-war levels.”
Brent crude oil for December settlement was up $1.34 at $109.73 a barrel at 7:30 p.m. on London’s ICE Futures Europe exchange. Prices fell temporarily on news of Qadaffi’s capture, then recovered.
Barclays maintained its forecast that Libya will restore production to about 600,000 barrels a day by the end of the year, as divisions among the rebel-backed National Transitional Council may slow rehabilitation of the oil industry.
“I don’t think the situation on the ground is different, Amrita Sen, a Barclays analyst based in London, said in a phone interview. “The problems of looting or damage at the oil fields haven’t changed.”
In the eastern city of Benghazi, where the rebel movement began, the mood was jubilant.
“This is the happiest moment of my life,” said Ibrahim Suleiman, a 22-year-old driver in the city. “When I heard the news on television I didn’t believe it, I ran off to the streets and I started jumping up and down.”
Executives are optimistic the demise of Qaddafi two months after he was forced from power will lead rebel fighters to resume work at their old jobs in the petroleum industry.
“Quite a few” workers fought against Qaddafi’s forces, Najmi Karim, chairman of oil field operator Mellitah Oil & Gas BV, said in a phone interview from Tripoli. “Now all the manpower should be able to go back, so we should see more stability and people will go back to a normal life.”
--With assistance from Ola Galal in Benghazi and Grant Smith in London. Editors: Bruce Stanley, Stephen Voss
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