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Thursday, September 01, 2011

Supply and Demand

Libya's new government needs to get oil flowing again. And they know this:

The NTC said it has a force of 3,000 protecting the oil fields and will aim to add another 2,000. AGOCO [NOTE: "Benghazi-based oil firm the Arabian Gulf Oil Company " said it has a "small army" in place in its eastern fields. Still, oil firms are not likely to give the green light to send in foreign workers until it is satisfied that this is enough.

Yet the oil is not flowing and the industry is not jumping in:


Benghazi's hotel lobbies are filled with bustling reporters and diplomats -- but there is no sign of the blackberry-wielding oil executives that big oil cities attract.


But the companies might have a way around the lack of government protection:

But a careful study of the hotel lobbies also reveals private security workers hired as scouts for oil companies which are dithering over whether to return to the oil-rich North African state.

Safety assessment is their mission now. But why couldn't it be military security? AGOCO seems to have used that private military route. Who is in their "small army?" Are they really all Libyans?

The new government (National Transitional Council) says that they don't want foreign military boots on the ground:

Industry sources told Reuters that oil companies have offered the Libyan NOC [NOTE: Libya's National Oil Corporation] assistance by providing their own security but there is so far little sign of these being accepted, with many politicians wary of possible political implications of a foreign security presence.

"Many companies are offering security but we have to study the strategic ideas of these companies," said el-Huni.

"We don't want foreign soldiers to be here."

But Libya needs foreign work boots on the ground for more than nominal oil production and exports. And private mine clearing is already in the new government's arsenal:

Russ Bedford, head of operations for Swedish company Countermine Operations working with the NOC on mine clearance said fresh minefields have been laid on the beaches around the Ras Lanuf oil export terminal and the Libya's largest refinery.

Foreign military contractors seem to be the best way to quickly provide security against loyalists trying to attack the fields. The government probably isn't settled enough to do the job. No foreign government will send in troops (well, China would) and the government says they don't want foreign troops anyway. Demand is there for security and private military companies can supply the skills.

The contractor would provide a professional cadre for the government troops that have been assigned to the job. Part of the contractor's job would be to train the Libyans to take over completely after a certain amount of time.

This is something to watch.

NOTE: I started using the updated Blogger today. It seems neither better nor worse than the old Blogger (which is perfectly fine, for the most part). I still can't search back more than about 3-1/2 years. And using the block quote function in "compose" mode is still hit or miss. I often have to edit that in HTML mode. Perhaps I'll discover the new and improved parts yet.