Libya Arrives for OPEC with Exports at a Trickle

Posted by Eric Haun
Monday, June 09, 2014

Libya's attendance at Wednesday's OPEC meeting will be an oddity for historians of the oil exporters club - a member with virtually no oil for sale.

As it struggles with its worst crisis since the 2011 war that toppled Muammar Gaddafi, early talk of a swift resumption of output have given way to pessimism, leaving OPEC with a longer lasting hole of over one million barrels per day in its supply.

Production is below 200,000 barrels per day, Oil Minister Omar Shakmak said on arrival in Vienna on Monday for the meeting, a fraction of the 1.6 million bpd Libya pumped before the 2011 conflict.

"Until the government gets control it cannot export on a normal basis... It is unlikely Libyan oil production will increase significantly in the next six months," said Charles Gurdon, managing director of Menas Consulting.

"Most of 2014 will effectively be written off."

The near absence of Libyan oil from international markets has helped anchor prices in a narrow range around $110 a barrel. That is a comfortable level for OPEC and few expect the cartel to change its output target for the rest of the year.

Rebels have blocked Libya's major ports and fields since last summer, slashing output.

With a renegade general launching war on Islamists, successive prime ministers struggling for legitimacy and a lack of oil revenues, the caretaker government could be forced to divert what barrels were destined for export to domestic refineries to supply gasoline to the capital.

Foreign oil companies have pulled out staff and frozen exploration activities, while Libya's hungry European customers have turned elsewhere for more steady supplies.

Monday's court ruling resolving a standoff between rival governments was welcomed by rebels holding some of Libya's largest oil terminals at Es Sider and Ras Lanuf and raises hopes that a deal to restore key export facilities could be reached soon.

But even if a deal to reopen all the ports and fields is made, industry insiders and officials from Libya's National Oil Corp (NOC) say it is hard to tell how much damage the closures have already caused to its precious oil infrastructure or how long it would take to return to prewar capacity.

Libya's western El Sharara oilfield may take months to reach its full output of 340,000 bpd, for instance, because at least 20 damaged well pumps need to be replaced.

Once output can build up, the damage is taking its toll on the country's production capacity. The International Energy Agency, the West's energy watchdog, in May cut its estimate of Libya's sustainable output capacity to 1 million bpd.

Fires on pipelines elsewhere and lack of maintenance could make resumption of exports a long and costly process.

Technically, Libya can still pump upwards of 1 million bpd but the new NOC chairman Mustafa Sanallah said it would only ramp up exports gradually - and in cooperation with OPEC. That would help avert a sudden slide in oil prices.

"From a technical point of view, our facilities are ready ...and our people can resume production very soon," Sanallah told a Libyan oil conference in London last month.

"But in order to resume production, we have to agree with our rivals, partners and with OPEC. We have still high storage of oil... So we have to export our oil gradually and by good cooperation between Libya and OPEC."

At a London conference last month on on Libya's energy sector presentations focused on plans for a new oil law, enhanced oil recovery and even pipeline upgrades, skirting around the fact that the state could not even guarantee the flow of oil.

"It is a very difficult market to predict," said Eric Oudenot, of Boston Consulting Group. "Nobody is really able to craft a strategy for Libya as it is too unstable."

(By Lin Noueihed and Julia Payne; Additional reporting by Ulf Laessing in Tripoli, Alex Lawler in Vienna; Editing by William Hardy and Veronica Brown)

Maritime Reporter September 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Exmar Optimistic About Gas Carrier Market into 2015

Belgian gas shipping group Exmar said on Thursday that the market for its very large and midsize gas carriers was at historically high levels in the third quarter

Confidence High in UK Logistics Sector

The latest U.K. Logistics Confidence Index commissioned by Barclays and Moore Stephens reveals that confidence in the U.K. logistics sector remains high but more

Statoil Invests $1.5b in US Offshore Project

Statoil together with co-owners in the Stampede development in the Gulf of Mexicohas sanctioned the Stampede project in the U.S. Gulf of Mexico. Statoil said it will invest $1.

Energy

Easing US Oil Export Ban Unlikey to Raise Gasoline Prices

A government study on Thursday essentially supported the notion that easing the decades-old restriction on exporting U.S. crude was more likely to lower than raise

Exmar Optimistic About Gas Carrier Market into 2015

Belgian gas shipping group Exmar said on Thursday that the market for its very large and midsize gas carriers was at historically high levels in the third quarter

Partners Deliver Modular Floating Tidal Energy Platform

A group of offshore companies, including Bluewater, Damen and Van Oord among others, has partnered for a floating tidal energy platform a project to generate clean electricity,

News

Easing US Oil Export Ban Unlikey to Raise Gasoline Prices

A government study on Thursday essentially supported the notion that easing the decades-old restriction on exporting U.S. crude was more likely to lower than raise

Keel Laid, Fabrication Started on 2 Navy Warships

This week, General Dynamics Bath Iron Works celebrated two milestone events for the Arleigh Burke-class program. On October 30, Bath Iron Works held a keel laying

Bulker Arrives to US on Her Maiden Voyage

The Port of Vancouver USA welcomed the Kypros Unity, commanded by Capt. Wilfredo F. Itable of Cyprus, on her maiden voyage Oct. 28. Capt. Itable and his 20-member

Logistics

Confidence High in UK Logistics Sector

The latest U.K. Logistics Confidence Index commissioned by Barclays and Moore Stephens reveals that confidence in the U.K. logistics sector remains high but more

Kirby Corp. Announces Record 3Q Results

Record 2014 third quarter earnings per share of $1.34 compared with $1.21 in the 2013 third quarter, which included a $0.08 benefit due to the reduction of the United earnout liability.

Vale Financials Disappoint; Iron Ore Prices, Currency Cited

Brazil's Vale posted a surprise loss of $1.44 billion on Thursday, hurt by a fall in the price of iron ore, higher production costs and a weakening Brazilian currency.

Middle East

Iran Gas Exports to Europe Would Take at Least 5 Years

Iran would take at least five years to start exporting natural gas to the European Union if sanctions were removed, industry experts said on Wednesday. Last month,

DBR Delivers 42 Gensets to Damen

DBR has delivered the last units of an order totaling 42 marine generator sets for Damen Shipyards Gorinchem. The generator sets will be installed on 14 ASD tugs

Qatargas Sells First LNG Cargo to JOVO

Qatargas sold its first cargo of liquefied natural gas (LNG) to Jovo LNG Storage and Transportation Co., Ltd. (“JOVO”), an independent LNG importer from the People’s Republic of China.

 
 
Maritime Careers / Shipboard Positions Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Salvage Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1892 sec (5 req/sec)