Weighing the Odds in Libya

By Padraig O'Hannelly.

Today's comments from French oil major Total were decidedly bullish on the prospects of doing business in Libya, as the company committed itself to further drilling.

The news follows positive signals in recent weeks from Russia's Tatneft, which is sending personnel back to Libya, presumably with the intention of eventually resuming operations on the ground.

But it's not all good news, however: French pipeline company Ponticelli announced just last week that it will pull out of Libya because of security concerns, while BP said in January that it was reconsidering plans to drill for oil in Libya following the attack in Algeria in which a number of its employees were killed.

Recent tender notifications from BP do seem to indicate that it is staying in the game in Libya, while a glance our sister publication, Iraq Business News, shows that BP has a history of not shying away from challenging environments.

But the contribution of foreign companies to the development of Libya cannot be taken for granted, and it's clear that security consideration are causing companies to keep the situation under review.

When weighing up their options, companies should bear in mind what contrarian investors have long known: The rewards to be gained when situations go from bad to good are not nearly as great as those to be gained when they go from seemingly terrible to just bad.

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