Before the conflict, Libya turned out 1.6 million barrels per day (bpd) of high quality crude and the loss of that oil has helped keep oil prices at historically high levels with Brent crude above $100 per barrel for most of this year.
Libyan officials have said some oil output is likely to come back quickly and analysts say some fields will return to production much faster than expected.
But Libya’s Sirte Basin, which holds about 80 percent of Libya’s proven oil reserves and accounted for the majority production before the war, could be more difficult to revive, according to John Hamilton, director at energy market consultancy Cross Border Information.
Troops loyal to former leader Muammar Qaddafi controlled the Sirte Basin for much of the uprising and some areas could be hazardous, he said.
“It could take a lot of time to clear the mine fields and remove booby traps from installations in that area as Qaddafi held onto it for most of the war,” he said.
“That’s where there could be nasty surprises.”
“There will be a long, slow incremental process of building up to where they ought to be, and that could take much longer than people hope. It could be three years if it’s tough.”
Industry players are optimistic that the taps will be easy enough to turn back on in some oilfields.
The chief executive of Austrian energy group OMV said it would take 12-18 months for oil production in Libya to get back to pre-war levels.
Christopher Bellew, broker at Jefferies Bache, said many in the market believed Libyan oil could come back on track even more quickly than this.
“In general, oil tends to come on stream quicker than people expect because there’s such a strong economic incentive to see the oil flowing,” Bellew said.
“But there are the unknowns on whether civil war will continue and whether there will be attacks on instillations.”
While production has started at various oilfields, and tenders for sales of some oil have been submitted, there has been little significant volume of crude exported since the National Transitional Council took power.
The way in which the first cargo was brought to market highlights the pitfalls for getting crude to world markets.
Libya’s Arabian Gulf Oil Company (Agoco) filled a cargo which failed to attract buyers because of confusion over quality, traders said this week.
Trading house Vitol re-offered the oil on Thursday.
And a lack of experience leading to errors and slow progress in getting oilfields and refineries back up to scratch will likely be a theme that keeps a brake on progress as Libya struggles to attract back people with appropriate expertise.
“It will need tens of thousands of people to return, such as oil engineers from places like China and India,” said Samuel Ciszuk, senior Middle East and North Africa analyst at IHS Energy. “Many will have left Libya in difficult circumstances, and may not want to go back.”
And while Libya post war — at least so far — looks to be in much better shape than Iraq, which was traumatized for years by sectarian violence, there are still plenty of obstacles in the way of a steady flow of oil.
Oil companies that had significant operations have said they are unwilling to send staff back to fields that they operated before the hostilities erupted because they still see the situation as too unsafe and volatile.
French oil major Total said on Monday that it was not planning to transport any Libyan crude oil for now.
And even when companies are confident their staff will be safe, poor quality infrastructure will slow progress.
“There was not that much damage (caused by the fighting), but the equipment was in a bad state before the war after decades of under-investment and mismanagement,” Ciszuk said.
