Libya oil production, exports could be down for months - IEA

15 March 2011 16:32  [Source: ICIS news]

Pro-Gaddafi forces bomb rebel positionsLONDON (ICIS)--Libya’s oil production and exports could be out of the market for months as internal conflict damages oil infrastructure and international sanctions hit trade, the International Energy Agency (IEA) said on Tuesday.

“After weeks of intermittent production and tanker activity, oil exports have ground to halt in the wake of fierce fighting between the government’s well-equipped forces and the more ill-equipped rebel groups,” the IEA's monthly report said.

Mounting international sanctions prompted almost all international oil companies to stop trade with the regime, the report said.

At the beginning of March, market participants said that oil trading firms were struggling to obtain credit to buy Libyan crude, as banks were complying with US sanctions.

US banks were refusing to open letters of credit required by Libyan National Oil Company for the sale of crude, according to traders.

By 11 March it appeared that production had slowed to a trickle because of the fighting, and major oil companies operating in the country like Eni, Oasis Group, Total and Repsol, pulled out their staff, reducing or shutting down production, the report said.

Libya has the capacity to produce 1.6m bbl/day and its low sulphur crude is exported mainly to Europe. According to the IEA, European refiners take 85% of  Libya’s exports.

“In 2010 Libya exported 1.1m bbl/day to IEA countries, with the biggest buyers Italy at around 370,000 bbl/day, followed by France at 210,000 bbl/day, Germany at 145,000 bbl/day and Spain at about 140,000 bbl/day,” the report said.

($1 = €0.72)

By: Giovanni Coiro
+44 20 8652 3214

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