Libya violence battering oil output

AP News
Posted: Mar 08, 2011 11:23 AM
Libya violence battering oil output

An official with a subsidiary of Libya's national oil company said Tuesday that production has dropped by about 90 percent, a reflection of the beating the OPEC member's oil sector is taking amid violence raging in the country.

Sirte Oil Co. is producing about 9,500 barrels per day, compared to normal production levels at about 95,000 barrels per day, said company official Ahmed Jerski.

"We're running the refinery," Jerski said, but added that "as for production, we've almost stopped."

"The situation, as you know, is not normal," he said.

Separately, an official with the Arabian Gulf Oil Co., another subsidiary of the National Oil Co., said Tuesday that operations at the eastern facility in Marsa al-Harigah were continuing, albeit at the same reduced capacity they reported earlier.

Output from fields controlled by Agoco, which has split from the NOC, is down by two-thirds _ or roughly 120,000 barrels per day, the executive said. He declined to be identified, citing security concerns.

Libya has been embroiled for the past three weeks in a massive uprising pitting rebels against supporters of Moammar Gadhafi, the country's leader for nearly 42 years. The fighting, which has intensified and included air strikes by Gadhafi's supporters against the rebels, has hammered the country's oil sector.

Analysts estimate that more than half of Libya's almost 1.6 million barrels per day in production is being shut-in, and the disruption in exports has sent global oil prices skyrocketing.

Oil markets are worried that the unrest in Libya could spread to other Organization of the Petroleum Exporting Countries' member states _ most notably Saudi Arabia _ squeezing supply and, in turn, driving prices even higher.

The U.S. benchmark crude contract for April delivery was hovering slightly below $104 per barrel on Tuesday, retreating from highs of almost $107 per barrel a day earlier. The drop came as several OPEC ministers said they were talking informally about whether to ramp up production to offset the Libya supply drop.

The violence has made it difficult to get a complete picture of Libya's oil production situation. Oil workers at various facilities are often unable to contact colleagues either at the fields or other installations and ports. Much of Libya's oil wealth is concentrated in the Sirte Basin, in the country's east.

Libya's oil minister, Shukri Ghanem, said last week that oil output in the country was down by at least 50 percent _ a drop he attributed to the exodus of foreign workers who fled the nation as the violence escalated.

Experts, however, believe that the picture is bleaker than what both the NOC and the subsidiaries that have broken away from it are painting for a country that sits atop Africa's largest proven reserves of conventional crude oil.

"Fighting in and around several of Libya's most important oil ports and refinery hubs over the past four days ... (has) made virtually all crude export loading impossible in the North African country, as well as most likely forced a shutdown of the majority of pipelines transporting crude from the inland oil fields to the storage and export terminals," IHS Global Insight Mideast oil expert Samuel Cizsuk said in a report.