What to make of Libya?

[mom cat]

What to make of Libya?

By Jim Smith, Editor of Jane's Transport Finance

US refineries covet Libya’s high-quality, low-sulphur crude, which can be carried on tankers to the US in half the time it takes for shipments from the Persian Gulf. Libya has the world’s ninth-largest estimated reserves, reckoned at about 36 billion barrels. Currently, Libya cranks out about 1.7 million barrels per day.

Libya wants more than the US$30 million to US$40 million per day in revenues that the country has generated on average for the last several years. US oil companies can supply the capital and technology to increase production.

US companies that invest in Libya may encounter problems with terrorists. Also, oil companies may not be able to negotiate a deal higher than the estimated US$2 per barrel margin achieved before 1986 when the spigot was turned off. In addition, oil companies may find that long-term investment is not warranted, as there is no guarantee of vast untapped oil fields beneath the desert sands, especially with already entrenched European companies vying for oil exploration contracts and driving up the price. There is also always the possibility that Ghadaffi, Libya’s mercurial leader, could withdraw the welcome mat at any time.

Another possibility is that the Saudis are trying to drive a wedge between the US and its new-found ally Libya, to assure that the Bush administration does not throw its cards in with Ghadaffi — although Saudi Arabia’s 263 billion barrels of proven oil reserves far outstrips Libya’s 36 billion barrels.

a bit more...

http://www.janes.com/business/news/jtf/jtf040624_1_n.shtml

[pinto]

1. great article...Libya is a gamble for Bushco, politically.

(who btw said he does not trust "madmen" and Khaddafi would seem to fit his play list, but go figure...)

Oil concerns, of course, see it verrrry clearly. New drilling plans in offshore fields, easy shipping route, etc.

Stay tuned as they say.

Thanks for the post, Janes is an oft forgotten resource.