Tags: Libya Oil Chaos

Libya's Eastern Port Tobruk Opens for Oil Exports

Monday, 28 Feb 2011 07:08 AM

Libya's eastern port of Tobruk reopened Monday and one tanker bound for China was being loaded, officials said, as the chief executive of Saudi Arabia's state-run oil giant announced his company had stepped in to compensate for an export shortfall stemming from the unrest in the North African nations.

The news offered a glimmer of hope that the disruption to exports from Libya may ease, at least slightly. The country, where Libyan leader Moammar Gadhafi is embroiled in a violent struggle to stay in power, is the only member of the Organization of the Petroleum Exporting Countries so far seriously affected by the protests roiling the Arab world.

The unrest in the North African nation has sent shudders through global oil markets, with concern centering on the possibility that the unrest could spread to other OPEC members.

"The terminal (at Tobruk) is working at 100 percent," said, Rajab Sahnoun, an official with the Arabian Gulf Oil Co., which is based in the eastern city of Benghazi, told The Associated Press. He said that one tanker bound for China was being loaded, with a capacity of 1 million barrels of crude, while another Italy-bound tanker was waiting and expected to load in the coming days.

Sahnoun also said that at least two of the major eastern fields, Sarir and Misla, were still producing, though at reduced capacity. He was not able to say how much production was down at those fields, but noted that the 34-inch pipeline to the terminal was operating normally. The terminal can store 4 million barrels of crude, he said.

Gamal Shallouf, spokesman for the Tobruk city council, said that along with Sarir and Misla, the Nafoura field was also producing. All three were operating at around 50 percent, he said.

Libya produces about 1.6 million barrels per day of crude oil, and about 85 percent of its exports are Europe-bound. But the fighting that has gripped the nation, with Gadhafi still struggling to retain control of the west while the east has fallen from his grip, has resulted in a production decline of over 50 percent, according to international oil company officials and analysts.

Saudi Arabia and other OPEC members have repeatedly said they are ready to step in and compensate for any Libyan export losses.

Khalid Al Falih, the chief executive of Saudi Aramco, said that the company had "met the additional needs resulting from the halt in Libyan exports." He did not specify how much additional crude the company had supplied its customers, saying that the situation "is continuously changing."

OPEC members have dismissed the need for an emergency meeting, even as consumer countries voiced alarm at the rally in prices that has sent crude futures in New York to nearly $100 per barrel on Monday while the London-based crude benchmark was above $113 per barrel.

But Saudi Arabia, which has carved a niche for itself as the market stabilizer, appeared eager to allay concerns by ramping up exports. Iran, which holds OPEC's revolving presidency this year, appeared to take issue with the Saudi efforts.

Iranian Oil Minister Masoud Mirkazemi called on Riyadh to "avoid any hasty decisions" regarding its crude oil output, the official IRNA news agency reported.

Iran and other OPEC members have repeatedly said the market is well supplied and that the price rally is driven now more by sentiment than supply-demand fundamentals.

But Iran is also one of the OPEC nations that relies heavily on oil revenues for its state budget, and the run-up in price is key to the government that is already under pressure from inflation, unemployment and international sanctions over its controversial nuclear program.

Libya's ongoing political struggle has hit hard at the country's vital oil sector. As the violence flared, with Gadhafi relying on militias and mercenaries to battle against Libyans demanding an end to his rule, production has been hit hard.

The country sits atop Africa's largest proven reserves of crude. But it also relies of foreign companies for their expertise as it has tried to boost its overall production levels.

The International Energy Agency reported late Friday that Libya is probably still producing about 850,000 barrels of oil daily, down from its normal capacity of 1.6 million barrels — but acknowledged the estimate is based on "incomplete, conflicting information."

Many of those companies, which include international giants such as Exxon Mobil, BP PLC, Spain's Repsol, Italy's Eni and Austria's OMV, however, pulled their foreign workers as the violence flared.

Local employees, in many cases, also steered clear from the fields and their offices because of the unrest.

In an indication of the state of uncertainty gripping Libya, where phone service at best has always been unreliable and Internet access spotty, Repsol had said Tuesday it suspended operations in the country. A day later, it found out that the fields it operates with other firms were still producing 160,000 barrels of crude daily — less than half of the 360,000 barrels per day produced before the crisis began.

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Libya's eastern port of Tobruk reopened Monday and one tanker bound for China was being loaded, officials said, as the chief executive of Saudi Arabia's state-run oil giant announced his company had stepped in to compensate for an export shortfall stemming from the unrest...
Libya Oil Chaos
Monday, 28 Feb 2011 07:08 AM
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