London, 24 August 2011: Reuters

Limited Libyan oil production could resume quite quickly as most oilfields appear to have survived the civil war unscathed, but output may be delayed several months by clogged pipelines, oil services company OPS International said on Tuesday.

OPS Chairman Gavin De Salis told Reuters Insider television that Libyan crude oil, prized for its high yield of valuable light products such as gasoline and for its low sulphur content, was also quite waxy, which could clog up pipelines if they had been left unused for some time.

"So there might be a little bit of effort unplugging pipelines, which is two to three months' worth of effort before they can resume full production," De Salis said in an interview. "But that will not affect all of the pipelines or all of the fields, so they can certainly start limited production quite quickly."

De Salis said he broadly accepted the forecasts in a recent Reuters' poll of industry executives and analysts, which suggested it would probably take six to 12 months to get production back up to pre-crisis levels. He said he thought Libyan oil production might previously have been restrained by the government, either for political reasons, perhaps because of the country's membership of the Organization of the Petroleum Exporting Countries, or for commercial reasons as Libya negotiated with oil companies.

"I think it just depends on the incentives," he said. "If they give companies incentives, they will be able to increase production rapidly in Libya to even beyond the 1.6 million barrels per day (bpd)." "We are not hearing many reports of damage in the oilfields, which were not particularly targeted, so we presume they can take back workers fairly quickly."

DAMAGE

De Salis said it was not yet clear what damage Libyan export terminals had sustained: "Clearly there is no point developing production at the oil terminals immediately if you can't export, and three of the major terminals are still in Gaddafi's hands," De Salis said.

"The front line a few days ago was at Marsa El Brega and Gaddafi's people also control the terminals at Ras Lanuf and Es Sider. Again we don't have reports that they were specifically targeted, so there may be limited damage there."

OPS International has sent a couple of staff to inspect its camps and equipment in an area south of the rebel-held Libyan town of Benghazi, he said, but added that he did not believe oil companies were yet resuming work in the country.

"There is not yet that level of preparation," he said. There is some uncertainty over which senior officials in the new Libyan administration would deal with oil companies, he said.

"The Libyan clients themselves have their management in offices in Tripoli and there will be many changes. There will be new decision makers, so they will take two to three weeks to formulate any plans," De Salis said. But he said he expected the key personnel in the oil industry working in Libya would be largely unchanged once work and production resumed.

"The oil industry is relatively professionally staffed, and we expect the same companies to be there and hopefully we will be back dealing with the same engineers and managers."

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