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Libyan oil recovers faster than expected
by Staff Writers
Tripoli, Libya (UPI) Oct 13, 2011

As the last remnants of Moammar Gadhafi's die-hard loyalists are being overpowered, some traders and industry observers say Libya could be pumping 1 million barrels of oil a day by the end of the year.

Nuri Berruien, chairman of Libya's National Oil Co., says production is around 390,000 bpd, about one-quarter of the pre-civil war level of 1.6 million bpd.

If the 1 million bpd mark is reached by the end of 2010, it would be three months ahead of previous forecasts.

But much will depend on the condition of the large Sharara and Elephant oil fields deep in the Sahara Desert 600 miles south of Tripoli, the capital on the Mediterranean coast.

These fields, operated by Repsol of Spain and Eni of Italy, could add 400,000 bpd to national production if they can be put on stream without too much trouble.

But their condition after months of fighting remains unclear. The Murzuq region where they're located saw heavy fighting between Gadhafi's forces and rebel troops of the National Transitional Council, widely recognized as the Libya's interim government, so damage could be extensive.

"The central area and the Murzuq region will truly test the recovery of Libya's oil industry," Financial Times energy correspondent Javier Blas observed.

"If these fields are quickly brought into production, then Mr. Berruien will be able to claim missions accomplished."

Berruien has predicted that it would take Libya 14-15 months to regain the pre-war level and could reach the key 1 million bpd mark by the end of the first quarter of 2012.

Now he "sounds more optimistic," Blas reported. "Upbeat oil traders and consultants say Libya could achieve the 1 million bpd by the end of the year."

Eni, the largest foreign oil producer operating in Libya before the civil war erupted in February, said Sept. 26 it had resumed production, the first foreign company to do so.

It said it was pumping 31,900 bpd from 15 wells in the large Abu Attifel field discovered in the 1960s. The maximum pre-war production capacity was 70,000 bpd.

The region lies 200 miles south of Benghazi in the eastern part of the country.

Eni Chief Executive Officer Paolo Scaroni told the Financial Times the company expected to have a large part of its production going again by the end of 2010.

Total of France reported restoring production at the same time in partnership with the state oil company the al Jurf offshore well and expected to slowly reach 40,000 bpd, the pre-war level.

The Libyans are pumping oil from a few eastern fields operated by the state-owned Arabian Gulf Oil Co., although the production level isn't clear.

These fields include Sarir, Libya's largest, and Mesla which together produced 250,000 bpd before the fighting began. The region was held by the anti-Gadhafi rebels during the war and damage was therefore minimal.

The NTC's oil and finance minister, Ali Tarhouni, estimated initial production could be restored within days, at an initial level of around 160,000 bpd.

"The early turnaround is testimony to the abilities of Libyan oil engineers, who are working in precarious conditions in remote desert fields," Blas noted.

"Foreign workers have yet to return in any significant numbers as security remains a major problem."

In actual production terms, Libya, with 2 percent of world output, doesn't appear to be particularly vital in the global energy order.

But Libyan oil is a high-quality "sweet" crude that needs little refining because of its low sulfur content and is thus highly prized by Western consumers.

Libya accounts for 10-15 percent of this kind of oil. The country's proximity to its main market, Europe, means lower transportation costs, adding to the value of its oil.

"Libya has for years punched below its potential, hampered by a lack of investment as its leader diverted funds for other causes and his personal use," Blas reported in a Sept. 23 analysis.

A decade of international sanctions stemming from terrorism blamed on Gadhafi's regime, crippled Libya's oil industry.

"But executives and officials believe the country, which boasts Africa's largest reserves, could produce much more oil in the next two decades if the new ruling class pursues the right policies," Blas said.

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Oil prices fall on jitters of China slowdown
New York (AFP) Oct 13, 2011 - World oil prices fell Thursday as traders fretted about slowing demand in China after its trade surplus narrowed for a second straight month.

New York's main contract, light sweet crude for November, lost $1.34 to close at $84.23 per barrel.

In London, Brent North Sea crude for delivery in November slipped 36 cents to settle at $111.11 a barrel.

Chinese trade data sounded alarms over the pace of its economic growth and how that would impact oil consumption.

The country's trade surplus fell for the second consecutive month in September, to $14.51 billion, as exports slowed sharply, hit by economic turmoil in the United States and Europe.

Beijing imported 12.2 percent less crude oil in September than it did in September 2010, Commerzbank economists noted.

"Some impact from weaker global growth was to be expected, and it looks like this is starting to happen," said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong.

"Crude oil is going to be pressured by some of the economic data from China... as well as third-quarter growth estimates," said Andy Lipow at Lipow at Lipow Oil Associates.

The market shrugged off an unexpected increase in crude oil stockpiles in the United States, the world's biggest oil consumer.

The US government's latest report on the nation's petroleum stockpiles showed that crude reserves rose by 1.3 million barrels to 336.7 million in the week ending October 7.

Analysts surveyed by Dow Jones Newswires had expected a decline of 200,000 barrels.

"Even though the crude oil inventory increased this week, we saw significant decline in the inventories for gasoline and fuel and those products are tending to draw up the market," Lipow said.

Gasoline stockpiles fell by 4.1 million barrels, 40 times more than analysts expected.

Distillates -- including diesel and heating fuel -- fell by 2.9 million barrels, compared with an estimated 400,000 million.


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BP paid $7 bln in Gulf disaster claims: executive
Washington (AFP) Oct 13, 2011
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