Libya seeks Italy`s help with fire at oil facility
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Last Updated: Monday, March 14, 2011, 10:48
  
Cairo: Libya's de facto oil minister said on Sunday the country's crude production has fallen "drastically" and that he has reached out to Italian oil giant Eni SpA for help in extinguishing a blaze at an eastern oil facility snatched back from rebel fighters.

The call for help by National Oil Co head Shukri Ghanem demonstrated the country's dependence on foreign oil companies' expertise and the crippling impact of an exodus of that labour force as a result of the fighting in the OPEC member.

"There's quite a big fire in one of our ... kerosene storage units (at Ras Lanouf), and we're trying to fight it," Ghanem said in a telephone interview. "We are asking for some help to try to put it down."

"I spoke with Eni's chairman to see if they can help us because it (the refinery) is on the Mediterranean and it affects the environment," he said, adding that he was told "they're deciding whether they can help."

Forces loyal to Libyan leader Muammar Gaddafi have recaptured Ras Lanouf — a key refining and export complex — after fierce battles against the rebels. It is part of a concerted push to reclaim the eastern part of the country where at least four major export ports are located.

Libyan state television reported Sunday that pro-Gaddafi forces retook the oil town of Brega, farther east of Ras Lanouf.

Before the mass protests that have ripped through the Arab world took root in Libya and became an armed rebellion, Eni produced about 244,000 barrels of oil and gas equivalent per day in the North African nation. But Eni, like other foreign oil companies, quickly withdrew its foreign workers as the fighting escalated, with the rebels battling Gaddafi supporters and effectively capturing control of the country's oil-rich east.

Since then, production from virtually all of Libya's oil fields has either been halted or sharply cut, bringing overall output down to roughly a third of its usual 1.6 million barrels per day.

Ghanem, who said earlier this week that production was at about 500,000 barrels per day, reiterated that output "went down drastically" in the wake of the weeks of fighting.

"We are working to make sure the integrity of the oil industry is not affected" by the fighting, Ghanem said. He added that several fire trucks had been stolen while the rebels held the facility, and that made it difficult to battle the blaze.

Experts have voiced concern that the fighting in and around the oil terminals will damage the infrastructure, making it even harder to bring the oil sector fully back on line.

Libyan state television reported on Sunday that all ports were now in government hands, and that workers should resume their posts. It also called on security forces to guard the facilities.

But it remains unclear how much oil is being produced in Libya, or exported from the country. Despite the state television report, at least two main ports, Benghazi and Marsa al-Harigah, are still in rebel hands.

At least three ports were closed as of earlier this week because of the fighting, and international sanctions on the country have seriously sapped the appetite for Libyan crude given the difficulties getting payments.

The country sits atop Africa's largest proven reserves of crude, and disruptions in its production, along with worries that the unrest will spread to other, larger OPEC members, have enflamed oil markets.

The US crude futures benchmark contract had shot up as high as almost USD 107 per barrel on the New York Mercantile Exchange earlier in the week before dropping to USD 101 per barrel on expectations Japan's demand would fall sharply following the massive earthquake and tsunami that ravaged the country.

OPEC kingpin Saudi Arabia has boosted its output to compensate for the Libyan production shortfall, and ministers of the 12-nation bloc that supplies roughly 35 percent of the world's oil have said they had begun informal talks to determine whether an emergency meeting was needed in light of the Libyan export disruption.

Ghanem said the country was still honouring all oil contracts on the terms upon which they were signed. But he conceded that the oil accounts had been frozen because of the sanctions.

"There's no change in our contracts," he said.

Bureau Report


First Published: Monday, March 14, 2011, 10:48


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