As oil companies are racing to assess the damage done to Libya’s hydrocarbon infrastructure, the returns from oil revenues make it clear that the sooner repairs are undertaken, the better.

Before the outbreak of the civil war that led to the disposal of Colonel Muammar Gaddafi, the country produced 1.6 million barrels a day (b/d) of crude. At present, oil production is effectively zero. While the National Transitional Council (NTC) says the resumption of production is imminent, with pumps at the Misla and Sarir oilfields to restart operations by 13 September, there is still no certainty over the damage to facilities throughout Libya.

Consequently, there is no clarity on how long it will take to resume full production. The council suggests that crude production could soon be back to about 250,000 b/d, but experts are divided over when pre-war levels will be attained, with estimates ranging from one to three years.

The timeline is determined by the damage done to infrastructure by the fighting and the prolonged shutdown period almost all fields were subjected to. The mature oil fields especially will have suffered from a lack of maintenance, and the waxy nature of Libya’s crude could exacerbate the problem.

At the current oil price of about $110 a barrel, every idle pump is a loss-maker, with producers losing out on sales of about $177.5m a day at zero production.

Such calculations will provide impetus for oil companies’ efforts to resume activities. Another calculation will spur them even further. According to data compiled by MEED, the budget value for the existing hydrocarbon facilities built since 1999 amounts to only $7.1bn. Whatever the cost of repairs, they are unlikely to exceed the total budget for the construction of the facilities.

This would mean that at current oil prices, the cost of reconstruction would be offset by no more than 40 days of full production.

Not that the cost of reconstruction would be a burden to international oil companies (IOCs). Initially, funding will come from soft loans given to the government, and assets channelled abroad by the Gaddafi regime, that are being returned to the NTC. Foreign oil companies will contribute at a later stage.

“IOCs will likely offer quick investments in exchange for future crude volumes,” says Samuel Ciszuk, oil and gas analyst at US-headquartered energy consultancy IHS Global Insight. “This will be a convenient way for Libya to be able to make sure the energy sector gets the investment it needs, without having to spend less on immediate social infrastructural needs. In essence, it will be like soft loans for the government,”