Some Libyan Oil Production Restarted

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Despite damage to many facilities and only a few returning workers, some of the oil fields in Libya have reopened for production. It is a small step but one that is positive for Libya and the companies at work there.

The Sarir oil field in eastern Libya has restarted production. It is not much but every little bit helps. The Sirte Oil headquarters near Gaddafi's home town is still deserted and it has sustained damage.

Libyan oil minister Ali Tarhouni said there has been no comprehensive survey of the Sirte Basin, which holds the largest collection of the major oil and gas fields but he estimates 10-15% of the infrastructure was damaged.

There are several charred storage tanks that took hits during the battles and burned. Many others remain intact but pipelines and pumping stations are in disrepair and have been damaged. The power plant for the facility lies in ruins.

Stacks of missiles were found in a petrochemical site. They were stored there by Gaddafi troops on the hopes NATO would not bomb the site and destroy the expensive infrastructure.

Many returning workers were amazed Gaddafi did not do more harm to the oil facilities like Saddam Hussein did when he left Kuwait. Hundreds of wells were blown up and set on fire during the retreat. Gaddafi did not inflict significant damage probably because he always expected to win and would need to restart production immediately to produce revenue. There was sabotage to the gas wells in the Hateiba gas fields south of Brega. Many were damaged intentionally. Looting has been especially bad and some companies have placed large orders for new equipment.

Two weeks ago the Gaddafi troops attacked the Ras Lanuf refinery and killed 17 guards before being repulsed. The fighting may be declining but there is still risk to the workers. For this reason many oil companies have not returned their workers to Libya. Many of the workers barracks were destroyed when advancing and retreating troops used them for accommodations and the opposing sides exchanged fire.

According to the National Transitional Council (NTC) more than 40,000 mines were planted around Brega during the fighting. Only 6,000 of them have been located. A military officer told Reuters that Gaddafi placed an order for 120,000 from Brazil during the conflict.

A Total SA spokesman said the restart conditions may be ok for Libyan workers but they were not bringing any workers back into Libya until they could be sure they were safe. The Baker Hughes office in Benghazi still has no Americans in sight. Only Libyan workers are trying to restore order and take inventory. Security remains a concern for everyone until Gaddafi is found. Gaddafi continues to broadcast messages from hiding and threatens to attack returning workers. An oil official in the NTC told Reuters they were going to hire 5,000 security guards to protect returning workers and secure the oil and gas infrastructure.

The oil minister said the initial production would not be for export but to replenish supplies of refined products inside Libya. There will be some oil exported from locations where there is no refining capacity. Blackouts and fuel shortages are common. Imports of refined products are costing the new government about $330 million a month.

The various estimates of the time required to return to full production of 1.6 mbpd are between 15-36 months. Nearly everyone believes they can restart 300-400,000 bpd by year end if the infrastructure is capable of transporting it.

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