Libya's getting ready to launch a new oil licensing round to boost production but there's widespread skepticism the country will be able to pull it off with armed militias still running wild 18 months after Moammar Gadhafi was toppled.

Libyan Oil Minister Abdelbari Ali al-Arusi told the Financial Times that a new oil law to regulate Libya's energy industry is being drafted that will pave the way for a licensing round by the end of the year.

Arusi said the government, having restored oil production to pre-2011 revolution levels of 1.55 million barrels per day, seeks to raise output to 1.7 million bpd after sorting out power supply problems.

The minister said that "if all goes well" the law should be in place within four months.

However, political analysts and industry insiders "say they are skeptical that Libya's political circumstances will permit a consensus on the legislation which will organize exploitation of the country's hydrocarbons wealth," Libya's economic backbone, the Financial Times observed.

The oil industry has been constantly disrupted by heavily armed militias, usually based on tribal or regional loyalties. Locals demanding jobs have been blockading facilities and shutting export terminals.

This has cost Algeria an estimated $1 billion in five months, Arusi says.

On top of this, militias are a major drain on government resources since they've been put on the state payroll in a bid to harness them. This has swollen the public sector salaries bill to $16 billion in 2013. That's more than double the $6.6 billion allocated in the 2010 budget under Gadhafi.

There seems no let up to the political violence that the government seems totally incapable of controlling.

The state military is torn between groups of officers split between autonomy-leaning eastern Libya, the epicenter of the NATO-backed revolution against Gadhafi, and the central government in Tripoli, the capital, in the west.

Oil installations haven't been attacked, although there were twin rocket attacks on oil and gas pipelines in eastern Libya earlier in April, but concerns that this will happen sooner or later rose sharply after the Jan. 16 seizure of the In Amenas gas complex in southeastern Algeria by jihadist striking from Libya.

Scores of people, including expatriate technicians and most of their attackers, were killed when the Algerian military stormed the compound.

That bloodshed, on top of the lawlessness pervading Libya, has left international oil companies reluctant to send back foreign staff.

This has seriously impeded government plans to fully restore the energy industry, and will continue to do so while Libya remains unstable and highly volatile.

The government has strengthened the Petroleum Facilities Guard to 18,000 men, many of them former militiamen being integrated into the post-revolutionary army.

But the country remains awash with weapons and the threat from Islamist forces in Mali, where French and African troops are battling jihadists of the al-Qaida in the Islamic Maghreb and its allies.

The bombing of the French Embassy in Tripoli April 23 rammed that home.

Foreign missions in Benghazi, capital of eastern Libya and long a jihadist stronghold, have been attacked. They include the U.S. consulate, which was hit in September, killing the U.S. ambassador and three other Americans.

But last week's embassy bombing was the first such terrorist strike in Tripoli.

Diplomats warn that the dangers have increased considerably because of the fighting in Mali. They believe the French embassy attack was a reprisal for Paris' decision the day before to extend its military intervention in Mali.

There's a cruel irony in this.

AQIM's seizure of northern Mali, as a vast jihadist base, followed a rebellion by Malian Tuareg tribesmen who had fought as mercenaries for Gadhafi then returned with a vast arsenal of weapons plundered from Libyan dictator's armories.

It was these weapons, now proliferating across North Africa, that ignited the Mali war.

"The Mali War was blowback from the Libya War," observed analyst Walter Russell Mead in The Guardian of London. "Now we have blowback from the Mali War in Libya."

Diplomats report that jihadists trek across the Sahara Desert to join groups in Benghazi and Derna, another eastern jihadist bastion to undermine the fledgling and dangerously fragile new democracy in Libya.