Eni: Libyan upheaval cuts 1.2M barrels from market

By Frances D'emilio

Associated Press

Published: Thursday, Feb. 24 2011 7:00 a.m. MST

Traders work the crude oil options pit at the New York Mercantile Exchange Wednesday, Feb. 23, 2011 in New York. Oil prices zoomed to nearly $102 a barrel Thursday, Feb. 24,in Asia as chaos in Libya disrupted crude supplies from the OPEC nation, and traders worried instability could spread to oil-rich countries in the Middle East.

Mary Altaffer, Associated Press

Enlarge photo»

ROME — Libya's violent upheaval has taken 1.2 million barrels of oil off the global market as energy plants and ports are shut down, according to Italy's Eni, the largest producer in Libya.

The figure represents a majority of Libya's total daily production, which before the crisis was about 1.6 million barrels of crude. The country also sits on the biggest proven oil reserves in Africa.

More than the shortfall, which experts say could be made up for by increased output in other countries, it was the "sense of general insecurity that can be a trigger that sets off speculation" on prices, CEO Paolo Scaroni told reporters Thursday.

Crude prices have jumped 20 percent to two-year highs in just a week, since Libya's uprising against the embattled regime of Moammar Gadhafi escalated and turned violent. Investors worry that other bigger producers, such as Iran or Saudi Arabia, could be engulfed by similar chaos.

The impact of Libya's turmoil was that "there are 1.2 million barrels less" on the market, Scaroni said. "That's not a lot, but it's something."

Earlier this week, Eni suspended its Greenstream pipeline supply of natural gas from Libya into Italy because of the security conditions.

The suspension means Eni's normal daily production of both oil and gas from Libya has dipped from 280,000 barrels of oil equivalent to some 120,000 barrels, company officials said.

Spanish energy company Repsol, which had earlier said production was suspended, said its output of oil in Libya was now slightly above 50 percent of capacity.

Repsol-YPF Chairman Antonio Brufau said the company is producing about 160,000 barrels of crude daily from fields it runs with partners. That's down from 300,000 barrels per day production for Repsol in Libya before the crisis started.

Brufau says the chaos in Libya will hurt Repsol financially but did not say by how much.

French oil giant Total said it started to wind down its operations, which average of 55,000 barrels per day last year, while Germany's Wintershall shut down operations that produced up to 100,000 barrels of oil per day.

Italy, which takes 12 percent of its natural gas from Libya, is having to import more from other countries, including Norway, Algeria and Russia, Eni said.

Italian government and energy officials have been reassuring Italians this week that the effects on Libyan energy production won't trigger shortages for consumers or a need to resort to strategic reserves of natural reserves.

Alan Clendenning in Madrid contributed to this report.

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