The entry of rebel forces into Tripoli on 21 August could be the final blow to the regime of Muammar Gaddafi, and has led to a focus on post-war Libya. After six months of civil war, a new government will soon have to start rebuilding the country’s tattered economy.

The Libyan economy is hugely dependent on crude production. Before the outbreak of hostilities, oil and gas exports accounted for 70 per cent of revenues, the country producing nearly 1.69 million barrels a day (b/d) of crude in January, according to the Paris-based International Energy Agency (IEA).

The fighting between government troops and rebels along the coastal strip between Tripoli and Benghazi prevented refineries and export terminals from operating. To make matters worse, Gaddafi loyalists launched raids to interrupt operations in rebel held areas, meaning oil production came to almost a complete standstill.

If Gaddafi is overthrown, the main priority for the National Transitional Council (NTC) will be to get oil flowing again. At present there is no reliable information on how much damage has been done to oil installations. Despite heavy fighting around the refineries and ports, such as Ras Lanouf, Es Sider and Marsa el-Brega, and attacks on the eastern fields, both sides seem to have avoided inflicting heavy structural damage.

To restore oil infrastructure to meaningful levels, Libya desperately needs the return of international oil companies (IOCs) and foreign workers. While IOCs, such as Italy’s ENI, have already signalled their intent to return, they will only set foot on Libyan soil is they feel secure to do so.

“The IOCs have always said in any statements made over the last six months that they want to return to Libya, [but they] will only go in if the security situation has been stabilised,” says Ross Cassidy, North Africa energy analyst at UK-based Wood MacKenzie.

Equally, production in Libya is heavily reliant on foreign workers, many of which come from neighboring countries such as Tunisia and Egypt. They will only be tempted back is violence ends and stability returns. But the NTC is facing a difficult task in having to accommodate various tribes and interests, and doubts over its ability to remain unified and establish a functioning transitional government have surfaced since the assassination of its military commander rebel Abdul Fatah Younis in July.

“ Should the unity of the Libyan opposition to the old regime start to crumble in any way remotely similar to what happened in Iraq in 2004-05, the whole oil and gas industry recovery will risk moving forward very slowly, if at all,” says Samuel Ciszuk, Middle East energy analyst at IHS Global Insight in London.

Another important incentive for IOCs is the removal of sanctions that were imposed to stop oil revenues from funding Gaddafi’s war effort. The embargo could end as soon as September, when Libya contact group meets in Istanbul.

Estimates on the speed of production recovery vary. Wood MacKenzie say pre-war levels can be attained within 36 months after the cessation of hostilities, but Cassidy says that levels of around 600,000 b/d might be possible after two months. Ciszuk says production of 1.2 million b/d is achievable within one year. The IEA does not see full production until 2015, pointing to the damage that the waxy Libyan crude will have caused to shut down facilities. The more mature fields in the Sirte basin, where the bulk of the country’s production is located, will take longer to produce back at old levels.

New projects to raise production above the pre-war capacity will most likely be delayed. These include field redevelopments such as Waha Oil Company’s North Gialo and NC98 projects, which would add around 180,000 b/d. Greenfield developments like the RWE Dea NC193 and NC195 fields will add another 50,000 b/d.  “You are probably looking at beyond 2015 for all of these now,” says Cassidy.

Apart from oil revenues, another boost to Libya’s economy will come from post-war reconstruction efforts. Business Monitor International (BMI) estimates that around $400bn is needed to repair infrastructure, such as roads and utilities. A cash injection would provide a significant stimulus.

A major source of financing for the reconstruction will come from assets Gaddafi assets frozen by the international community. The value of those deposits is believed to be about $100bn. The NTC was declared as the legitimate heir by the US in July, and Germany and France have already indicated they will unfreeze the assets they hold.

The unfreezing process may take more time than expected. “The unfreezing of assets is terribly important,” says Oliver Miles, former British ambassador to Tripoli and chairman of MEC International. “But it’s a matter of political will. Politically speaking, the security council froze the assets, so it has to unfreeze them, not necessarily by a resolution, but by agreement.”

“I’d like to see the US, France and the UK standing up to Russia and China and telling them to agree to unfreeze the assets now. But I suspect that they might just hand it over to the lawyers, which could take six months.”