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What Will Libya Do With Its Oil?

On September 16, Libyans fighting for democracy were finally legitimized in the eyes of the world as the National Transition Council received recognition under the UN as the representative of the country. This ended a seven-month struggle against forces supporting the now-deposed Gaddafi regime, and now, the future of this North African country lies in the hands of forward-thinking individuals hoping to implement modern and democratic institutions to the country. Yet this fledgling democracy’s rise is being watched carefully by the entire international community not just for political purposes, but for its number-one resource that literally fuels the global markets – its oil.

 

Image courtesy of ritholtz.com

 

Before the war, Libya was producing around 1.6 million barrels of oil per day, and not just any oil – this is high-quality, light crude, 85 percent  of which is exported to European countries. This profitable exporting came to a halt, however, with the onset of violence. As the International Energy Agency observes, many of Libya’s most productive oil fields were relentlessly hit by Gaddafi forces. Fields and pipelines were so damaged that the IEA expects to see Libya’s production return to normal by 2013 at the earliest. Currently, the country is able to produce about 300,000 barrels a day, but it is clearly the responsibility of the new government and National Oil Company to bring Libya to its full potential.

So who is in charge of the newly-revamped oil industry? Dr. Nuri Berruien, who has a history in petroleum engineering, is the chairman of the state-owned NOC. Already Berruien has stepped up to the plate to restart oil production, especially in the Sirte basin region, which is believed to hold 80 percent of Libya’s reserves. “We have started gas production from Sirte Oil. This will help bring electricity to Libya and help keep our diesel bill down,” he said earlier this month. Berruien should indeed be eager to resume production and export of Libya’s most prized resource, which would give the new government a source of income, as well as a chance to strengthen economic and diplomatic ties with its European customers.

The future of the Libyan government is in the hands of the Libyans themselves, observes Fareed Zakaria in Time Magazine’s September 5 issue. He describes the different path America took with Libya than with Iraq. Here, the US “insisted on burden sharing that allowed locals their own revolution.” In this way, Libyans have far fewer political baggage and unwanted Western connections than Iraq did in the post-Saddam era. In this way, Libyans have a more active and personal role in their future, and Libya may very well become a prominent member of the global oil marketplace. While the era of Gaddafi stifled the growth of this resourceful North African country, perhaps the new democratic government will flourish under the watchful eyes of forward thinkers.

 

 

Claremont Portside

 

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