FORTUNE — The death of Moammar Gadhafi is welcome news for many people, from Libyan rebels to the families of the Pan Am flight 103 victims. For EU leaders struggling to find any glimmers of hope for their economically troubled members, Gadhafi’s death may be enough to tamp down at least one fire in the euro zone.
Italy has long been a close trading partner of Libya, and its energy firm ENI is one of the largest producers of oil in Libya. Ahead of the revolution last year, ENI was generating 15% of its total output from Libyan wells. Libyan oil production, around 1.5 million barrels a day before the revolution, fell to essentially zero during the height of the fighting, but now with Gadhafi gone, the Libyan oil industry may rebound fairly quickly.
“The question is how rapidly can it approach pre-revolution levels,” says Andrew Lipow, president of oil industry consulting firm Lipow Associates. “To export what it had pre-revolution levels is probably a year and a half away, but producing over half million barrels a day is probably by the end of this year and a million per day in the first half of 2012.” Already shares of ENI have rallied 4% since the Libyan leader’s death was announced.
Another plus to the Italian economy is that natural gas exports resumed last Thursday. Italy is a significant natural gas user and historically gets 10% of its needs from Libya. The resumption of Libyan natural gas flows means Italy probably saves some money on costs from other natural gas imports it was having delivered, notes Lipow. More significantly, it likely helps avoid price spikes or gas shortages during the coming winter. It even will probably help at the gas pump: Italy is a significant user of natural gas for automobiles, with as much as 25% of new car sales from cars that use LNG or CNG instead of gasoline.
The big potential benefit for Italy and the rest of Europe: rebuilding Libya. European countries should have the inside track over Chinese and Russian firms on winning business since NATO supported the rebels, adds Lipow. The tab for rebuilding Libya’s infrastructure and its energy industry isn’t accurately calculated yet, but it will certainly be in the billions of dollars, money that the new Libyan government will have at hand with the release of $37 billion in frozen Libyan assets by the U.S.
Gadhafi’s death won’t save the EU. But considering EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters this morning that Italy “urgently” needs to take steps to bolster growth, every little bit helps.