Oil companies returning to Libya

Oct. 22, 2011 at 5:53 PM

TRIPOLI, Libya, Oct. 22 (UPI) -- Oil companies are ramping up production in Libya after the death of the country's deposed ruler, Moammar Gadhafi.

Paolo Scaroni, chief executive of the Italian oil giant ENI, said his company has already restarted its activities in Libya, The Washington Post reported Friday.

Gadhafi had helped change the balance of power between companies and exporting countries by raising prices, royalties and taxes and getting other members of the Organization of Petroleum Exporting Countries to do the same.

"Gadhafi opened the modern era of oil that set the stage for the oil crises of the 1970s," said Daniel Yergin, an industry consultant. But, he added, "Over the course of his 42-year rule, he squandered and wasted an enormous amount of the country's oil wealth."

Libya currently produces 400,000 barrels of oil a day, far less than its pre-civil war levels of about 1.6 million bpd. It is uncertain when production will be back up that high level.

"Some mature Libyan oil fields, such as those of the Sirte basin, require water or natural gas injection to maintain pressure in the reservoir, and that has not been done for over six months and the risk for failure on this front remains high," said a report issued Thursday by Barclays Capital.

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