Oil flows again in Libya

More than a third of Libya's oil production has come back on line in recent days after a striking militia opened the valves on a critical pipeline between two major western oilfields and Mediterranean port terminals outside the capital of Tripoli.

Protests and strikes by militant groups that overthrew the Libyan dictator Muammar Gaddafi reduced Libya's oil production to 10 per cent of its capacity in recent weeks, pushing up global oil prices and threatening to make Prime Minister Ali Zeidan's weak interim government look impotent.

Libyan oil executives said it was not clear whether the lifting of the strike by the Zintan tribal militia was the result of a negotiated settlement with the government, a short-term expression of goodwill or a negotiating tactic. The parliament recently voted to increase the salaries of civil servants, which include oil facility guards, and government officials have threatened to arrest strike leaders.

With the pipeline open, a critical source of oil is flowing again to the global market. But no resolution appears near to the more intractable strikes at export terminals and oilfields on the eastern side of the country, where the remaining two-thirds of the nation's oil production is based.

Oil production was expected to reach 700,000 barrels a day by the end of the week, up from a low of 150,000 barrels early this month. Normal output is 1.6 million barrels a day.

David Goldwyn, the State Department coordinator for international energy affairs in the first Obama administration, said the reopening of the western oilfields represented "a little bit of success". Saudi Arabia, which has been pumping at record levels in recent weeks, could lower its production now to keep prices stable.

Libya, which has Africa's largest proven reserves, is an important source of high quality oil for European refineries. Government officials have tried to reassure nervous foreign oil companies with promises of action to end the strikes. "We will soon overcome these problems and hiccups," Nuri Berruien, the chairman of the national oil company, told an oil conference this week.

The well-armed Zintan militia has backed striking oil guards demanding back pay.

New York Times