29 August 2011 12:40 [Source: ICIS news]
By Peter Salisbury
The NTC, which was set up to lead the revolution against the regime of Libyan leader Muammar Gaddafi, said on 25 August that it was relocating from the country’s second city, Benghazi, to Tripoli as it assumed increasing control over the capital.
As the NTC consolidated its power, energy markets became increasingly mindful of the fact that
Analysts saw the loss of Libyan output as a contributing factor in $100-plus oil prices in
The European benchmark crude contract, Brent, was trading at $109.65/bbl for October on Friday 26 August, having fluctuated throughout that week on the back of conflicting reports on the progress of the NTC’s rebel army.
Petrochemicals producers, traders and buyers have all described the continued high price of crude oil as being a key driver behind recent high prices in petrochemical markets.
High prices for end products are eroding end-user demand for many commodities, market participants say, a particular concern given fears over the state of the global economy.
The NTC is likely to focus on restoring output as quickly as possible in order to fill its coffers. But recent statements by council members have been wildly optimistic, says Samuel Ciszuk, senior Middle East and
The NTC will honour all lawful contracts made under Gaddafi’s rule, the NTC’s minister for reconstruction Ahmed Jehani said in a Reuters interview, describing oil production contracts as “sacrosanct”.
In another interview, the council’s official in charge of oil, Ali Tarhouni, said that he hoped to see oil production restored to around 500,000-600,000 bbl/day within two-to-three weeks before ramping output back up to 2010 levels.
However, given damage to pipelines and export infrastructure and the effect of quickly shutting down oil output, restoring it could take a considerable amount of time, Ciszuk says, particularly if violence continues to flare up around key oil fields and export routes.
“This will take a long time,” he explained. “An optimistic scenario would be 300,000-400,000 bbl/day within three to four months.”
The NTC’s current position of power does not necessarily mean that the country will stabilise in coming weeks or even months, Ciszuk added.
The NTC says it is keen to retain technocrats from Gaddafi’s regime, learning from the mistakes made in
But rivalries could still flare up in the near future, destabilising governance and development in the country.
“They might not keep top people like Shokri Ghanem [former prime minister, oil minister and head of state energy firm National Oil Corporation] in place, but they want to keep as many people in place as possible,” Ciszuk said. “But will there be purges afterwards? If we start to see more than 3-5 people go, then chances are that the gloves will be off.”
Stability will be key to encouraging future investment in the country, he said, and any petrochemicals firms looking at
Many analysts expected Libyan development to boom following the lifting of economic sanctions by the
The country was seen as a major potential petrochemicals producer, and ramped up its production of oil, refined products and gas following the lifting of sanctions. Yet only two downstream projects got off the ground.
In 2007, Dow Chemical and state energy firm National Oil Corporation announced they had formed a 50:50 joint venture to expand and operate the company’s biggest petrochemical production complex, at Ras Lanuf on the
In 2009, Norwegian fertilizers producer Yara International became a 50% partner in Libyan Norwegian Fertilizer Company (Lifeco), along with National Oil Corporation and the Libyan Investment Authority, each with a 25% stake in the firm. Lifeco took over the operation and development of the country’s only fertilizer plant, at Marsa El Brega, also on the
A Dow spokeswoman said on Friday last week that the company had put the $2.5bn-3bn Ras Lanuf project on hold during the financial crisis of 2008-2009, while a Yara spokesman said that it was monitoring the situation in the country but believed it could be “months” before staff returned to work in Libya.
($1 = €0.69)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|