THE death of Muammar Gaddafi could usher in a wealth of opportunities for Scottish oil and gas firms, one expert predicted last night.
Professor Alex Kemp said companies would be anxious to resume activities in the Libyan oil fields after production was put on hold as the state was torn apart by civil war.
Aberdeen University’s professor of petroleum economics said a swift return to law and order could herald rewards for existing operators and make Libya an attractive option for new investors.
“As soon as the situation settles down and companies are no longer having to worry about things like security and sabotage, Libya will suddenly become much more appealing for the oil and gas sector,” he said.
“The first priority for companies will be to see if the contracts which they had been awarded under the Gadaffi regime are still valid.
“Assuming they are – and any incoming Libyan government is going to be anxious to get the revenue from oil production – it should be full steam ahead.
“Libyan oil is light, and very suitable for petrol and aviation fuel, which makes it attractive to the world market. The cost of extraction is quite low so as soon as firms can establish their contracts are valid I expect a flurry of activity.”
Pre-war production levels were about 1.6million barrels a day – a not insignificant proportion of the worldwide total of 88million barrels, and more than the 1.2million barrels produced daily in the UK.
“The question a lot of people will be asking is what this renewed supply will mean to world prices,” he added.
“I don’t see it making much of a difference.”
Another Aberdeen academic – David Capitanchik – said he was surprised the dictator had remained underground in Libya for so long.
“The big question now is – what kind of regime are we going to see in his place? If people believe they are going to see a democracy based on the western model they are very mistaken,” said Professor Capitanchik.
“There is no one dominant power waiting to step in so I think we will see a lot more unrest in Libya for some time to come.”