[Editor’s note: the following is a crosspost by Michelle Caruso-Cabrera that originally appeared on CNBC.com]:
In Libya, “everyone is going to be wealthy,” says Eni CEO Paolo Scaroni. The multinational oil and gas company, headquartered in Italy, has more operations in Libya than any other driller in the world.
Scaroni cites compelling statistics of what could be: “Five million people and 2 million barrels of oil (per day), which means that this country can be a paradise, and I am doubtful that Libyans will not catch this opportunity of becoming the new Abu Dhabi, or the new Qatar or the new Kuwait.”
But they haven’t yet. And if recent events in the North African country are any indication, it is going to be some time before paradise arrives.
Security concerns are the reason the International Energy Agency predicted last week that Libyan output will remain stagnant—below 700,000 barrels per day for the foreseeable future. Last week’s brief abduction of Libyan Prime Minister Ali Zeidan by militants underscores “the challenging security environment,” said the IEA.
Production in Libya plunged 80 percent in September—to only 300,000 barrels per day—due to militant activity, labor disputes and political turmoil. It subsequently rebounded to roughly 600,000-700,000 in early October, according to officials interviewed by the IEA. But that is well below the nearly 1.4 million barrels per day it was producing in 2012.
Scaroni said he receives daily reports about production and that fluctuations are large on a daily basis. He said he believes it will be many months, if not years, before there is stability in production levels.
“The major goal of [deposed Libyan dictator Moammar] Gadhafi was to destroy every Libyan institution,” he said, “so at the end of the revolution, they found themselves with no institutions whatsoever.”
That situation is contrary to other countries in the region, Scaroni said. “Tunisia has very strong unions; Egypt a very strong army; Algeria, both army and unions. Libya, nothing,” he said. “How to move from nothing to a solid institution? It will take a long time.”
CNBC spoke with Scaroni the day after news broke about the U.S. capture of suspected bombing mastermind and al-Qaeda leader Abu Anas Al-Libi in Tripoli. He was unfamiliar with the event, yet seemed nonplused.
“I go all the time. … In my view, Libyans are among the most pacific (people) in the world. Because in a country where every family has at least one weapon, there is no police, no army. … In total, the situation is pretty calm,” he said. “Imagine any other country in a similar situation.”
Still, Scaroni noted a sharp contrast between the Libyan and Egyptian revolutions. “You know we’re the largest oil company in Egypt as well. Egypt has troubles. You’ve seen yesterday 40 casualties, but what is important is a huge difference between Egypt and Libya is that even during the whole revolution, we never lost one barrel of oil production.”
“That is, Egyptians have been wise enough to understand that whatever political situation we will end up with, they will need the resources coming from oil and gas,” he continued. “So at the end, they’ve been wise. We’ll continue to produce in Egypt. Egypt is probably close to an end of its turmoil. We will see which end, but it’s close to the end. But for the time being, everything’s fine with our production there.”
- US energy could be a $500 billion boon: FedEx CEO
- How to invest in Egypt
- Shale surge leads US to out-Saudi Mideast: Study
©2013 CNBC LLC. All Rights Reserved. Michelle Caruso-Cabrera.