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Oil exports on hold at last rebel-held Libyan port

By Tarek El-tablawy

Associated Press

Published: Monday, March 14 2011 10:52 a.m. MDT

TOBRUK, Libya — The last major eastern Libyan oil port firmly under rebel control is not expecting another crude tanker for a month, a senior oil official said Monday, raising new questions whether the OPEC member was still exporting crude at all.

Rajab Sahnoun, a top executive with the Arabian Gulf Oil Co., or Agoco, in Tobruk also warned that the Marsa al-Harigah facility's two functioning storage tanks could be full, forcing a shutdown in production if the tanker does not come as expected.

"There is no export right now," Sahnoun told The Associated Press, adding they expected a tanker in mid-April. "If there is no tanker by the middle of April, then we'll run out of storage space."

Marsa al-Harigah was the last of the four main export terminals in eastern Libya to continue operations amid heavy fighting between the eastern opposition and forces loyal to Libyan leader Moammar Gadhafi. The three others — Ras Lanouf, Sidr and Marsa al-Brega — were said to have been closed for several days.

The battles have hammered Libya's crude production, slashing it by at least two-thirds, according to Shukri Ghanem, head of Libya's National Oil Company, who said on Sunday that output was down "drastically."

Analysts and experts have questioned whether Libya was still producing or exporting any substantial volumes of oil.

In addition, world oil prices had, until the end of last week, shot up on the disruption in the country's supplies, and experts noted that buyers are increasingly wary of sending in tankers into an area where fighting is raging.

Libya's east is home to roughly 70 to 75 percent of the country's reserves — the largest in Africa. As the protests that began Feb. 15 snowballed into a full scale conflict, foreign oil companies withdrew their staff and workers fled the country, depriving Libya of the brains behind much of its output.

Ghanem and Libyan government officials have called on the foreign oil companies to return, but the calls have gone unanswered as the conflict deepens and the international community begins to pile on sanctions.

Meanwhile, the rebels in the east have worked to cast themselves as credible partners for the international community. Agoco was among the subsidiaries of the state-run National Oil Co. that split off from the parent firm.

Sahnoun said current production levels were between 75 to 80 percent of the roughly 220,000 barrels per day from the two fields that feed into the Marsa al-Hariga terminal. He also said that the pipeline running to the facility was running at a normal capacity that he put at 100,000 barrels per day.

Analysts, however, have said they believe production and pipeline flows have dropped sharply. Before it closed, an official at Sirte Oil Co., which handles oil at the Marsa al-Brega facility, said output was down by as much as 90 percent last week.

"Nothing is operating in Brega at all," said Ahmed Jerski, a senior official at the Sirte Oil Co.'s Brega offices, adding the facility has been evacuated completely. "We were forced because of all the shooting to leave the place."

Analysts questioned even if the pipelines were running at anywhere near their capacity.

"I don't think anything in Libya is running at capacity," said Samuel Ciszuk, Mideast energy analyst with IHS Global Insight in London. "It just seems unlikely given the amount of skilled personnel that have fled, including the Libyans."

"You don't want to be stuck in the desert when the supply chain is down," he said, referring to the fields located deep in the heart of the Sahara desert.

The disruption in production and exports is the tip of the iceberg in terms of problems for Libya's oil sector.

If storage facilities fill up, any fields that are still operational will have to shut down. If that is not done in what the industry refers to as "orderly" shutoffs, then there could be problems restarting the production.

Oil companies are also facing a difficult political balancing act. While Ghanem, for example, called on Italy's Eni SpA to help them extinguish a blaze at the Ras Lanouf facility, international companies may not want to appear either too distant or too deferential for fear of alienating whichever side emerges the winner.

International oil companies "will come under tremendous pressure from the Gadhafi regime should he re-cement his grip over most of the country and at least some of the main oil areas," Ciszuk said. "The regime has previously used pressure on IOCs as a way to gain political concessions from their home governments, even if in completely unrelated areas."

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