Tripoli attack highlights security challenge ahead of elections

09 May 2012

Violence and political instability hampering potential overseas investment in key oil assets

An attack on the headquarters of Libya’s interim government has highlighted ongoing security problems ahead of the country’s planned elections in June.

Armed men claiming to be revolutionaries attempted to storm the Tripoli offices on 8 May in an effort to claim payment for helping defeat the regime of former leader Muammar Gaddafi.

The clash between government security forces and about 200 militiamen resulted in the death of one security guard and several injuries, according to reports.

In a televised speech, Libyan Prime Minister Addurrahim al-Keib said the attackers were “outlaws” pretending to be revolutionaries in order to claim reward money.

Libya’s oil production has approached pre-civil war levels in recent months, but foreign oil workers have largely failed to return.  The ongoing security problems will add to Libya’s challenge of attracting investment from overseas to rebuild its civil and industrial infrastructure.

“Oil companies were quick to move in after the conflict and restart production at producing fields, but the skilled foreign workforce has not returned,” says Samuel Ciszuk, consultant at UK-based KBC Energy Economics.

Libya’s elections are due to be held on 19 June, after which the elected Public National Conference will appoint a prime minister, cabinet and constituent authority. The new government will need to attract investment from overseas to develop upstream oil and gas assets while appeasing a volatile electorate.

“The infrastructure is old and rather decrepit after decades of underinvestment. A lot of very big investment is needed,” says Ciszuk.

“A government will quickly become unpopular if they are perceived to give the oil companies too much of a share. It might make sense economically in the long term, but might be a very hard sell in a populist political environment,” he adds.

Libyan oil production is currently estimated to be at about 1.38 million barrels a day (b/d) compared with a pre-war output of 1.6-1.7 million b/d output.

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