By JAMES HERRON
LONDON - Oil production in Libya is resuming far faster than
initially expected and is on track to reach 0.7 million bpd,
almost half its pre-war level, by the end of this year, said
the International Energy Agency Thursday.
The agency praised the "Herculean effort" by Libyan
officials to restore shut down oil fields, which have proven
its previous forecasts to be far too cautious. As such, global
oil supply and demand look to be in balance in 2012, the IEA
said, although it warned that low inventories and the risk of
further Middle East instability could underpin continuing high
As recently as September, the IEA was predicting Libya would
produce no more than 0.4 million bpd by the end of this year.
That milestone was passed in October and Libya was producing
more than 0.5 million bpd by early November, the IEA said.
Shortly after the IEA upgraded its forecasts, Libyan oil
officials said another of the country's largest fields could
restart within a week.
It was initially feared that the restart of the Elephant
field, which capable of producing up to 150,000 bpd of oil,
could take months because its accommodation block had been
looted by Gadhafi forces. Elephant is partially owned by
Italian oil company Eni
The IEA now expects Libya to produce 0.7 million bpd of oil
by the end of this year. It also increased its forecast for
first quarter Libyan production by 60% to 0.8 million bpd.
By the end of 2012 it expects Libya to produce 1.17 million
Many constraints remain before Libya can restore full
pre-war oil production of around 1.5 million barrels a day, the
IEA said. Damage caused by heavy fighting around oil export
terminals during the civil war is likely to constrain output
even if oil fields themselves have not been damaged, it
The most costly and specialized repairs may have to wait
until workers from international oil companies return to Libya,
The improved supply prospects will put the oil market
virtually in balance in 2012, the IEA said. An extra 1.4
million bpd of oil and natural gas liquids production from
sources outside OPEC in 2012 should be enough to fill rising
demand, it said.
The IEA also trimmed its demand forecast for 2011 by 70,000
bpd and for 2012 by 20,000 bpd.
However, with oil inventories now below their five-year
average for three consecutive months, the first time this has
occurred since 2004, there is little margin for error in the
market, the IEA said.
Dow Jones Newswires