Libya’s oil market still plagued by insecurity
The Libyan oil law being drafted by a committee is expected to be ready before September “if all goes well” according to oil minister Abdelbari al-Arusi. The law has to come into force before a licensing round can be launched, but most analysts remain pessimistic about the law being passed.
Minister Arusi said that the law will be safeguarding the nation’s interest; promote transparency, cheaper contracts and a healthier environment. He claimed that the past was marred with corruption. Critics always point out the incapability of government to assert its authority, often challenged by armed militias who intimidate officials. Attacks on oilfields by armed men cost the government an approximate loss of a billion dollars in the past 5 months. He claimed that the state is “getting stronger” and most of these men are now employees of the government.
Experts and analysts consider the political environment will not pave way for the law to be approved. Richard Quin, an analyst at Wood Mackenzie, said “a comprehensive oil law requires a stable political environment because it has implications which will last for decades.” He added that Libyan officials are “scared and can’t make decisions” because of the repercussions attached to failure. He stated that the government’s strategy is “the more you can delay a decision, the better it is” since success remains unrewarded.
The law is needed to encourage investment in order to increase oil production level or at least maintain it. Libya, however, has been able to bring its oil production back to pre-revolution levels of 1,55m barrels per day. Mr. Arusi said the country aimed at increasing output further to 1,7m barrels per day after overcoming power supply difficulties in oilfields operated by Arabian Gulf Oil Company.