(Updates with oil price in seventh paragraph.)
Jan. 6 (Bloomberg) -- Libya’s new leaders will remember who provided the most help in overthrowing Muammar Qaddafi, when it comes to new oil concessions. Italy, the biggest investor in the country, may find itself at a disadvantage.
Libya has the world’s ninth-largest proven reserves of oil, estimated at more than 46 billion barrels, according to the Central Intelligence Agency’s World Factbook. Much of the oil is prized for being low-sulfur.
France and the U.S. haven’t come across as “someone who is basically grabbing” and are “playing it right,” former Libyan Oil Minister Ali Tarhouni, who quit shortly after the capture and death of Qaddafi, said in an interview yesterday in Washington. Italy “will take time to figure it out.”
At stake is Italy’s position as the top energy investor in Libya, where its closest rivals are Total SA of France, which was the first country to recognize the Libyan opposition, and Russia’s Gazprom OAO. The U.S. and the U.K. joined France in leading efforts to win United Nations approval for air strikes against Qaddafi’s forces.
“We are indebted to the French, and I cannot find the right words to say it,” Tarhouni said, listing Libya’s “friends” in the following order: France, the U.S., Britain and Italy. “If everything else is the same, of course we will remember our friends.”
Eni, Exxon, BP
Italy’s Eni has been working in the former Italian colony since 1959 and generated 13 percent of its revenue there before the conflict. Before the war broke out in February, Eni’s Libyan oil and natural gas volumes were an estimated 280,000 barrels a day, while Total produced 55,000 barrels a day. Exxon Mobil Corp. and BP Plc also operate in the North African country.
Crude for February delivery was at $102.60, up 79 cents, at 8:46 a.m. in New York. Yesterday, the contract fell $1.41 to $101.81, the lowest settlement this week. Prices gained 8.2 percent in 2011.
No new concessions will be given until after elections scheduled for June, Tarhouni said.
Oil production today is already more than 1 million barrels a day, and by June it will be just 200,000 barrels short of the 1.6 million barrels the North African country was pumping before the armed uprising, according to Tarhouni.
“These oil fields weren’t in as bad shape as we thought,” he said. “The damage was less than 10 percent and tended to be localized. That made a big difference.”
Starting ‘From Nothing’
Restoring oil production was the easy part. Shaking off the legacy of a four-decade dictatorship and carving a democratic state out of a country devoid of political parties or even a constitution has been far more problematic, Tarhouni said.
“We are literally starting things from nothing,” he said. “Building a political party? We don’t even know how to do that. The process requires tools, and we don’t have them.”
He said he declined a Cabinet post because he thought he could “do a better job outside the government” to help build what he calls a “Libya coalition” that can attract moderate Muslims. He explained that in Libya a secular government, understood in the west to mean the separation of church and state, is impossible.
“That will never happen” in this region, he said. “We are looking at a different model.”
The National Transitional Council has made clear that the backbone of the new constitution will be Islamic law, though how it will be interpreted is unclear.
Exclusion of Women
One of the main flaws in the transition from revolution to democracy has been the potential exclusion of women, who played an instrumental role in the overthrow of Qaddafi. Over the eight-month conflict, women nursed the wounded, cooked meals, raised money for weapons and, in some cases, even took up arms.
Still, though half of Libya’s 5.5 million people are women, they may be limited to 20 seats in a 200-member constituent assembly to be elected in six months.
Tarhouni acknowledged that such a low representation isn’t acceptable in a country where women are highly educated and there are “more women physicians than there are men.” While they enjoy more privileges than women in Saudi Arabia, who are forbidden from driving, he said they are still far from gaining equal rights with men.
Libya also has economic difficulties.
At least a quarter of the population is unemployed, and those who work earn a “meager” salary of $200 a month, according to Tarhouni. Although Libya has the potential to be “tremendously wealthy,” the government is still in dire need of the money, he said.
Since Qaddafi’s demise, the new leadership has recovered only a fraction of the estimated $168 billion in assets abroad that were frozen in March by the UN Security Council.
Even as the U.S., U.K. and Europe have taken steps to release $18 billion held in their banks, legal hurdles have meant that only about $3 billion has reached Tripoli. To free up cash, Libya’s central bank and its overseas subsidiary were taken off the UN sanctions list on Dec. 16.
-- With assistance from Alessandra Migliaccio in Rome. Editors: John Walcott, Jim Rubin, Heather Langan, Ben Holland.
To contact the reporters on this story: Flavia Krause-Jackson in Washington at firstname.lastname@example.org.
To contact the editor responsible for this story: John Walcott at email@example.com.