Guest Post: Libya's Post Gadhaffi Future - Who Gets The Oil?

Tyler Durden's picture

Submitted by John C.K. Daly of OilPrice.com

Libya's Post Gadhaffi Future - Who gets the Oil?

Muammar Gadhaffi’s 42 year-old regime is in its death rattle – maybe today, maybe tomorrow, his administration that has ruled Libya with a quixotic and brutal hand is about to pass, in Trotsky’s piquant phrase, “into the dustbin of history,” prompting the question “what next?”

The glittering prize is Libya’s 1.6 million barrels per day output of high quality crude, which accounted for about 2 percent of global oil output drawn from Africa's largest oil reserves, whose exports have been stymied since the NATO-led campaign began six months ago. Projecting into the future, analysts believe that has reserves to sustain its previous level of production for 80 years.

Who will eventually control this asset, with oil prices currently at roughly $84 a barrel, generating an income of more than $12.6 million per day?

Italy’s ENI?

France’s Total?

Britain’s BP?

U.S. companies?

Or, will China add Libyan future production to its string of acquisitions, as it is already China’s eleventh largest source of imports?

The crystal ball is murky indeed, but when the uprising against Gadhaffi began six months ago, according to the Chinese media, about 36,000 Chinese were in Libya working on 50 projects.

Cautiously accepting the new reality, Chinese Foreign Ministry spokesman Ma Zhaoxu said in a statement posted Monday on the ministry's website, "The Chinese side respects the choice of the Libyan people. The Chinese side is willing to work with the international community to play a positive role in the reconstruction process of Libya in the future."

The key word here is “reconstruction,” a noun conspicuously absent from any statements by the NATO coalition members.

When the uprising against Gadhaffi began 75 Chinese companies had already invested billions of dollars in Libya in infrastructure projects, including oil, railway and telecoms projects. After the insurrection erupted in February China began a substantial land, sea and air evacuation operation of its nationals.

Benghazi-based Libyan rebel oil firm Arabian Gulf Oil Co. (AGOCO) information manager Abdeljalil Mayouf cautioned however that China’s “softly, softly” approach to the uprising may initially cost it influence in the new Libyan reality, saying, We don't have a problem with Western countries like the Italians, French and UK companies. But we may have some political issues with Russia, China and Brazil.”

While many analysts believe that Italy’s ENI and France’s Total could be successful in post-insurrection Libya because of their countries' heavy support for the rebels, it may all devolve down to a question of funding, and given Beijing’s pockets, despite its caution in its foreign policy, that may well give China the edge.

Few promoting the prospects of Italian and French energy firms now remember that just a couple of months ago the Libyan dissidents were literally begging for financial assistance.

Furthermore, particularly in African endeavors, Chinese investment has extended far beyond mere resource acquisition to providing infrastructure essentials such as roads, schools and health clinics, all of which will be in short supply in post-Gadhaffi Libya.

Finally, certainly last but not least, China has no history of colonialism in North Africa, unlike Libya (occupied by Italy, 1911-1947), Tunisia (France, 1883-1956), Algeria (France, 1830-1962), Morocco (France, 1906-1956) and Egypt (Britain, 1882-1922.) While such issues are not fiscally tangible, they may well influence the post-Gadhaffi negotiations.

Waiting in the wings are U.S. and Canadian companies such as Marathon, ConocoPhillips, Hess, Occidental and Suncor, which withdrew Libya at the onset of insurrection, as well as Russian companies, including oil firms Gazprom Neft and Tatneft, which had projects worth billions of dollars in Libya alongside Brazil’s Petrobras. BP, which did not have production in Libya before the war, said it was planning to return for exploration efforts.

In the coming weeks Libya’s National Transitional Council will doubtless be inundated with offers from various companies promoting their advantages. Total and ENI have the inside geographical edge, being across the Mediterranean, while American and British companies have cutting edge technology to refurbish Libya’s decrepit energy infrastructure.

But it is too early to count China out from the race – they do not come burdened by history, and they come with deeper pockets than all their competitors. The NTC, if it indeed represents the Libyan people, will not be unswayed by such concerns, as the European rivals have yet to utter the one of the words most dreaded on Wall Street in considering profits, “reconstruction.” Whatever the shortcomings of Beijing’s views of events in Africa’s largest oil producer, they do extend beyond mere corporate profits to include rebuilding, which is likely to ensure them a place at the table.

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Rastadamus's picture

Well we know who won't get it.... The Libyan people.

WineSorbet's picture

Wow, you beat me to the punch.  Sooooo true.

spiral_eyes's picture

Come on bitchez!!!

Everyone knows the big question is 'Who Gets Qadaffi's Gold'

My money is on the Bundesbank... 

walküre's picture

The BOE

Germans made it very clear they didn't want to engage in more Anglo-American plunder warfare.

Thieves and pirates on both sides of the Atlantic. Wall Street, Rothschilds and Windsors. Great wars were started over less.

Rodent Freikorps's picture

If you can't turn a profit off war, why fight one?

That'd be pure bug house nuts.

Oh, wait...

Sudden Debt's picture

What did they ever do to make any claims on it right?

and don't start the history channel with "we rebelled blabla bla" because that's history.

 

DaveyJones's picture

Well first, they're not responsible or experienced enough to set up a democracy so first, our executive must violate the war powers act to demostrate exactly how a a "true" American democracy works. Then, they must be forced to set up a democratic puppet regime where, now this is important, each puppet has an equal right to say what they are told and paid to say. It's only after they realize, talking to Iraqis, that westerners are only there to take their oil, that things start to divert from the master plan.      

Rick64's picture

Yes, but this is not just about an oil patch, but about control of the monetary system that will control everything. Libyans get ready for loans from the IMF so you can build infrastructure, and guess what we know the Multinationals that can do it. Its going to be expensive, but you will prosper until your debt exceeds your GDP because of interest payments for those loans. Don't worry we can roll that debt over for you, but we will need you to privatize some of your resources, implement higher taxes, lower wages, raise interest rates, ect...and no you can't print your own money anymore those days are over. You will be required to sell the oil to whoever we tell you to sell it to (in Dollars of course)which will give us leverage against that country. Welcome to servitude, I mean U.S. democracy. China and Russia squeezed out of the picture. This is economic warfare against anybody thats not on the side of the U.S..

DaveyJones's picture

true true, the IMF regime scheme will be written into the first paragraph of their constitution

YHC-FTSE's picture

+1

I think that covers it. With all the war, gold and oil conversations floating about I forgot about the most important aspect of this: Debt slavery. 

Juan Wild's picture

Yes, its all all about getting countries on the Rothschild Teet. The Libyans will have their Red Pill moment long after they are hooked on endless debt and discover they have now become part of the wonderful global community aka ROTHSCHILD OWNS YOUR ASS BITCHEZ!!  They will have iPads, McNuggets and 7 credit cards each to buy more worthless shit. Then they will discover the real reason for their "tears of liberation" a couple of days ago in Green Square.

New_Meat's picture

Here's cognitive dissonance: Rothschild owns a Sharia-ruled state.  Maybe the Baron has come up with a counter-example for his rule? 

Who knew?

- Ned

magpie's picture

you mean the UK ? /snark

New_Meat's picture

nah, Londinistan b old-news.  Phillips did a great book.

- Ned

{OT-I have a U.K. associate who had planned a trip to the Pyramids for vacation.  Just came back.  He said "We left UK to avoid the riots."}

jmc8888's picture

Yep to the entire nested back and forth.

Because it fits so nicely. 

 

NATO's Post-Westphalia Overthrow of Qaddafi

http://www.larouchepac.com/node/19154

Mustafa Abdul Jalil...remember that name.

 

 

YHC-FTSE's picture

As stomach-churning as that sounds, it's probable. By the time the Libyan populace realize that there will be no more oil dividends, free hospitals, and free universities, their oil facilities guarded by Blackwater thugs, billions of overseas assets missing, not to mention their gold, it'll be too late to have another go at a revolution - they'll be living in a military/police state like the rest of us if they are lucky or a version of Baghdad if they are not.

 

The most important man in the new regime, Ali Tarhouni (Finance and Oil Minister) is an interesting figure. He has been living in the USA (No surprises there) since 1978, which makes him an American, and until recently taught Business economics at Washington Univ. Michael G Foster School of Business. Academia is usually cocooned from the rest of society, so perhaps he was fortunate enough to avoid all the raghead and sandnigger epithets during the past couple of decades from his peers. If so, forget all the other nations, the fact that he has the crucial post for the next year at least means that, almost certainly, Libyan assets will be America's. 

dark pools of soros's picture

dead on until the last part... 'America's'??  do you mean Exxon?

falak pema's picture

So ironic and so probably true. All this so that those new sheeple can be sheared not by their own Oligarch in power since 40 years but by the foreign oligarchs. Now that is reverse engineering à la France-Afrique! 

Just look at Gabon and Congo, Ivory Coast, Nigeria and Angola, and you'll know where the new Libya is heading!

Who cares if its Total, BP or Shell, it'll be the usual suspects, give or take a few Oligarchs from "East of SUez", China oblige!

baby_BLYTHE's picture

Donald Trump said Libyan War would be a waste if the United States didn't get a hold of the oil he believes we are entitled to

LynRobison's picture

The topic of who gets the oil is interesting, but it will all be moot when Gadhaffi or forces loyal to him hide out in the Libyan desert, invite Iran to set up a nuclear missle there, and fire that missle at Israel. At that point, the question of who owns the Libran oil will be the least of anyone's problems.

LynRobison's picture

I am going to ignore your anti-semitic stupidity and focus on your overall stupidity. Do you really think a single nuclear strike against Israel would be all there is to it? Nuclear missles would be launched in response from lots of places to lots of places. Maybe one would even hit you... 

narnia's picture

the world's largest arsenal of nuclear weapons has meant precisely squat in korea, vietnam, afghanistan, iraq, pakistan, yemen, libya, somalia...  they are liabilities, not assets at this point.

LynRobison's picture

That is until the looser of an asymmetric war (such as Gadhaffi in Libya) wants to start a nuclear conflagration amongst the victors. I am just saying that a vengeful Gadhaffi and a power-hungry Iran are a dangerous combination. 

smore's picture

Oh No!  A "looser" on ZH!  A vengeful Gadhaffi and a power-hungry Iran sound like music to my ears.  Vengeance, bitch!

blueRidgeBoy's picture

+1 for the avatar.  -1 for the gratuitous spell check.  net: 0

falak pema's picture

Lyn must work for one of these think tanks who employ latter day Dr Stangelove nerds. Each scenario more scary and out of the ball park than the last one.

No wonder she can't tell friend from foe, question from answer. She is her own enigma. Only one solution if she be a Lyn...

narnia's picture

Please explain one armed conflict instigated by Iran in the last 100 years. I'm all ears.  Surely they've been involved in several, trying to expand their borders being "power-hungry" and all.  

I'm not a fan of the current regime in Iran, but they pose ZERO threat to the USA.  They are arming themselves as we would be doing if the Chinese had 10 bases in Mexico & Canada, air craft carriers along both coasts, and were using war rhetoric against us.  If the US withdrew from the region, the whole Iranian regime would fall within weeks.  We are perpetuating this.

Gadhaffi has never posed a threat to the US.  He's a village idiot, but he didn't do anything to provoke regime change.  An armed group of al qaeda rebels decided they wanted to throw him out & take his gold & resources. NATO backed these thugs.  If he counter attacks with something fierce, I'd say NATO brought it upon themselves.

All these real and rhetorical conflicts have nothing to do with US national security.  If a nuclear bomb goes off, odds are the US and/or Israel are behind it.

fajensen's picture

"""

When the uprising against Gadhaffi began 75 Chinese companies had already invested billions of dollars in Libya in infrastructure projects, including oil, railway and telecoms projects. After the insurrection erupted in February China began a substantial land, sea and air evacuation operation of its nationals.

"""

Why there is an "arab spring" at all: Western powers Griefing and Spoiling China and Russia. Hopefully, it backfires in a spectacular but rather messy way!

Eager learner's picture

According to the James Corbett the one of the 1st thing the rebels (why aren’t they called insurgents? They fit the definition perfectly) did was attack a Chinese factory. They know where there bread will be buttered.

Raynja's picture

You write a scenario. Someone agrees with you and you call them stupid, racist, and wish death on them.
Jesus fuck you're a retard.

LynRobison's picture

Yep, if I did that, then you are right. I probably misunderstood them. My apologies. 

SilverDosed's picture

....and the race card gets played.

Fuck off you dirty kike. <<<now theres some real anti-semitism for you.

kito's picture

maybe nobody will get the oil. its possible gadhaffis counter insurgency groups will keep the infrastructure paralyzed for an extended period of time.

Juan Wild's picture

hmmm, then the ground invasion will begin. Might as well just continue down into Sudan as well. You know the HARVARD Humanitarian Initiative and The Satellite Sentenel Project have discovered mass graves there. We won't talk about all the oil Sudan has though. That's never a reason there is so much "liberation" happening. It's always a HUMANitarian thing! fuckers.

Abiotic Oil's picture

Who gets (got?) the gold?

CrashisOptimistic's picture

MORON!

Tyler, please stop presenting morons.  Surely you can find people to pay you to be posted who are not morons.

"Projecting into the future, analysts believe that has reserves to sustain its previous level of production for 80 years. "

THIS IS NOT HOW IT WORKS.

You do not take reserves and divide them by production and announce XXX years..

Production falls off long before the field is empty.  This is just stupid.  You can sustain "its previous level of production" only for as long as new drilling offsets dying old wells.  There is ZERO evidence that would be 80 years for Libya.

Look at the latest news out of Iran.  They are looking at 300K bpd production fall off because of the death of old fields.  Look at the North Sea.  They get all the new drilling they want and they are cratering 100s of K bpd per year.

And look at Mexico.  They are even worse.

Stop presenting morons who divide reserves by PRESENT PRODUCTION to quote how long they can hold that production level.

Hagbard Celine's picture

Damn. You beat me to it.

 

"analysts believe" = "some people say"

New_Meat's picture

Trav?  That u?  Two accounts?

magpie's picture

Since victory in Libya hasn't lowered oilprices as promised, Western elites can at least give themselves a pat for creating bad blood between the BRICS.

A Lunatic's picture

Yeah, the "victory". LMFAO!

magpie's picture

The victory is ongoing and can be proclaimed daily.

unum mountaineer's picture

84. talking wti? where's brent? another thing, the q-man will just burn the oil fields...no one gets it..that just pisses people off more than anything. 

CrashisOptimistic's picture

For God's sake OPEN YOUR EYES.

Refineries pay Brent prices if they are on the coast.  Only the midwest refineries with access to Cushing can pay WTI prices, and they price their output gasoline like the prices out of the coastal refineries.

Brent's down about $15 from its high.  Gasoline is up 20% on the year because Brent is $14 higher than it was at the start of the year.

The futures markets mean NOTHING to a refinery trying to negotiate a price.  The only thing that matters is what the Chinese are willing to pay.  That number is Brent or TAPIS, both between $110 and $120.  And yes, that means Brent just rose over $110 again today.  Spread $25.  (It was about 14 and rising sharply before Libya ever hit the radar screen).

TrulyBelieving's picture

Good question who winds up with the oil, another good question who winds up with the gold?

Negro Primero's picture

...oops

1:51 pm | Emen .- President Hugo Chávez denounced the Venezuelan embassy in Tripoli was "plundered and robbed" by "hordes."

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