Oil companies play a waiting game on Libyan crude

As fighting drags into its fifth month in Libya, international oil companies that had once operated there are choosing to wait it out.

Oil companies are playing a waiting game in Libya five months into a civil war whose outcome is still uncertain.

A key question is how and with whom they will need to negotiate to revive production of 1.6 million barrels per day that formed the country's economic backbone until the fighting broke out.

Rebel forces were struggling yesterday to repair the oil refinery at Misurata, a coastal town they have recaptured from the forces of the Libyan leader Muammar Qaddafi.

Guido Westerwelle, the German foreign minister, threw his support behind Col Qaddafi's opponents during a visit to Benghazi, days after the UAE also endorsed the rebels.

International oil companies have long since ceased operations in Libya and evacuated foreign staff. They have yet to outline plans for re-entering the country or clarifying their relationship with the National Oil Corporation, the state oil company.

"I cannot say when OMV [the Austrian oil company] will be back," said Sven Pusswald, a spokesman for OMV. "We monitor the situation."

BP was similarly guarded about its position in Libya. "We had this contact with NOC going back to 2007, and we have to see what happens next," said Robert Wine, a BP spokesman. "I'm afraid it is just waiting to see how the situation on the ground develops."

Analysts predict that whatever political structure emerges, oil companies will have an easier time returning to Libya than in other post-conflict oil-producing countries, particularly Iraq, where years of sanctions stifled development.

"Libya had already come in from the cold, so it had a much more diverse investor mix," said Catherine Hunter, an analyst with IHS, the forecasting company. "They have to pay much more attention to investor rights than in Iraq. In Iraq there were only a few foreign players involved because of the sanctions."

The only foreign oil company that has signalled a permanent withdrawal from Libya is ConocoPhillips. In March it was revealed that the US company was considering unloading its share of a concession in Libya as part of a sale of up to US$17 billion (Dh62.44bn) worth of assets around the world.

The Qaddafi government has lost its key interlocutor with foreign oil companies. Shokri Ghanem, the former chairman of NOC, resigned from the role this month to join the resistance.

Rebels have managed to sell Libyan oil through a tie-up with Qatar, whose national oil company is marketing Libyan crude.

International support for the rebel National Transitional Council grew with the UAE's formal recognition this week. Last Thursday representatives from 30 nations, including the US secretary of state Hillary Clinton, pledged more than $1bn to the rebels' rebuilding efforts.

"The first priority for anyone [setting up in Libya] would be revenues," said Ms Hunter.