The Mad Rush For Libyan Oil Profits Has Begun

By: EW News Desk Team   Date: 24 August 2011

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EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team

 

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24 August 2011

The fighting in Tripoli may have yet to be ended, and Muammar el-Qaddafi may have yet to been caught, but the scramble for Libya’s oil wealth has already begun to heat up among numerous international players.

On Monday, Italian oil company Eni became the first company to announce its intentions to return to Libya in order to restart oil production, after months of inactivity due to the escalating conflict.

According to the New York Times, Italian Foreign Minister Franco Frattini had appeared on state television on the same day to declare that Eni “will play a No. 1 role in the future” of Libya.

“The facilities had been made by Italians, by (oil field services group) Saipem, and therefore it is clear that Eni will play a No. 1 role in the future,” said Mr. Frattini.

Mr. Frattini further stated that Eni technicians were already on their way to eastern Libya to restart production, though Eni has since denied Mr. Frattini’s claims.

While Italy may have been Libya’s former colonial power and largest trading partners, other international organisations and companies are also ready to move in onto Libyan oil fields.

BP of Britain, Total of France, Repsol YPF of Spain and OMV of Austria, who along with Eni were among the largest producers of oil in Libya before the fighting broke out, are all set to gain massive profits once most of the conflict has subsided. Russia, China and Qatar are also set to move into Libya to gain their share of the profits.

"China's investment in Libya, especially its oil investment, is one aspect of mutual economic cooperation between China and Libya," said Mr Wen Zhongliang, deputy head of the Chinese Ministry of Commerce's trade department. "We hope that after a return to stability in Libya, Libya will continue to protect the interests and rights of Chinese investors and we hope to continue investment and economic cooperation with Libya."

American companies like Hess, ConocoPhillips and Marathon are also set to return to Libya at the opportune time.

“They are just sitting and waiting and trying to figure out who will run the place,” said a risk consultant, who is advising some US firms on Libya, to Reuters.

Before the rebellion broke out in February, Libya exported 1.3 million barrels of oil a day. While this only accounts for 2 percent of the world’s supply, Libyan oil is well renowned to be of a higher grade, and thus far move valuable than the majority of oil supply in the market.


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