Libya's Brega Port under siege as guards prevent exports

Libya’s energy sector was dealt another blow on 11 July when a group of protesters from the Oil Facilities Guard closed down the Brega Port and prevented a cargo that was in the port from loading.

The members of the guard are demanding that they be paid their backdated salaries, just as those members of the guard who were blocking the ports of Es-Sider, Ras Lanuf have been paid. One of the guards told the Turkish media on 11 July that “we closed Brega today as they haven’t given us our financial dues for several months. We will prevent all ships from being loaded with fuel. There is a cargo [in the port] and we won’t allow it to load oil until we receive our dues in full.”

Brega, run by the NOC’s Sirte Oil Company subsidiary, is a relatively small port with a 90,000 b/d capacity that has lately been used to supply the Zawia refinery. Its closure is a challenge given the troubles with the eastern oil export terminal ports over recent months and the fact that it will still take a while before operations are back to normal in Ras-Lanuf and Es-Sider, handed over earlier this month.

Given that the protesters are making purely financial demands the situation should be resolved easily enough. Despite this, with the political scene in such chaos and with the economic situation in deep crisis, how long it will take the government to resolve this standoff has yet to be seen.

Meanwhile, workers at the 103 Oil Field 200 km from Ajdabiya and operated by the Zuetina Oil Company stopped working this week. On 9 July the workers began an open sit-in at the field in protest against the company’s board. It is not clear exactly what it is about the board that the workers are protesting about, but they are refusing to leave unless their demands are met.

The good news, however, is that the agreement between the head of the Cyrenaican Transitional Council (CTC) politburo, Ibrahim Jedhran, and the government appears to be holding despite the fragility of the situation on the ground. It was reported this week that foreign workers have returned to work in the oil fields in Jalu and that European companies are restarting their operations.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2014 Menas Associates

Libya: New discoveries

The National Oil Company (NOC) reported two new discoveries this month. The first was announced by its Arabian Gulf Oil Company (Agoco) subsidiary and is in the Sirte basin, about 80 km southwest of the town of Marada. According to the NOC website, the company drilled the FF2-47 well to a total depth of 7,270 feet and tested oil from the Lidam formation.

The test flow rate was 1,900 b/d of 27o API oil. The exploration well was first drilled in 1971 but the results were not very encouraging and only 65 barrels of oil were recovered – which is why it was considered uncommercial at the time.

Meanwhile, a consortium comprising Algeria’s state-owned Sonatrach International (Sipex), Oil India, and the Indian Oil Corporation made the second discovery. The gas discovery was made at well C1-96/01 in contract area 95/96 in the Ghadames basin, 650 km southwest of Tripoli.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2014 Menas Associates

Appealing to service companies

On 27 March, Deputy Oil and Gas Minister Omar Al-Shakmak told representatives of oil service companies in Tripoli that the government was 'doing everything it could to provide security for the oil areas and to activate the role of the Oil Installations Protection Force.'

The National Oil Corporation (NOC) budget has been adopted, he noted, and has 'approved the drilling and maintenance of a large number of oil wells, in addition to a large number of other projects that will provide many opportunities.' Shakmak had met with the companies to encourage them to resume operations.

Representatives of service companies told him that business was still difficult and that they were suffering not only from sabotage and theft carried out during the revolution and continued security problems but also from a lack of liquidity and problems in getting business from NOC while the budget had not been passed.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2012 Menas Associates

Libya discovers three new oil fields

Libya's National Oil Corporation (NOC) has announced the discovery of three new oil fields. The first discovery was made by Turkish Petroleum (TP) working on experimental wells B1-17/3, on Block 147, in the Morzuk Basin in southern Libya. Preliminary tests showed that the first well has the capacity to produce around 265 b/d. Further tests are expected to be carried out in due course.

The other two wells, said to be rich in both oil and gas, were discovered by a consortium of several companies affiliated with the NOC and the Libyan Investment Institution. Libya has estimated oil reserves of 60 billion barrels, and gas reserves in the region of 1,500 billion cubic metres.

In other developments, the head of Libya's OPEC delegation has said that Libya will not increase production if speculation drives oil prices to $100 per barrel, but will look to fundamentals to determine whether the group needs to hike output.

Reiterating his earlier point about output levels head of NOC Dr Shukri Ghanem said, "Once we feel that world demand is increasing and there is not enough supply in the markets in that case we will increase the production."

"There is a lot of oil in the market; there is no shortage, so putting more oil [in the market] would not be prudent," he added.

Source: Africa en ligne, Reuters

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

Security for companies working in Libya of interest to local authorities

The level of security for companies working in Libya remains a matter of acute interest to the local authorities. The likely withdrawal of a number of IOCs at the end of unsuccessful exploration programmes is recognised by Libya's senior planning agencies as an unwelcome setback to the economic development programme.

This will negatively affect Libya's principal economic sector, and considerably more exploration will need to be undertaken to ensure that reserve-to-production ratios do not fall significantly. The past six months - including the news of IOC withdrawals and soft world oil demand - have reinforced the pessimism for a strong surge in oil income for the immediate future.

It is interesting that NOC head, Dr Shukri Ghanem, was very sharp in making clear that the departure of IOCs was nothing unusual and that Occidental would remain for the time being. He was also at pains to assert that the long-term hydrocarbon development programmes are still on course. As noted last week, Shell's and BP's current exploration operations will be crucial. So far, BP remains convinced that its vitally important offshore drilling programme will begin before the end of the year. According to Ghanem, care has been taken to ensure that a repeat of the Gulf of Mexico oil spill will not occur.

The negative impact of the withdrawal of some IOCs should not be over emphasised. Indeed, the simultaneous presence of 47 IOCs in Libya was – because of many reasons, including its inadequate infrastructure and NOC's insufficient numbers of senior personnel who are able to negotiate with the IOCs – placing a severe strain on the country to cope with the influx. The income flows from oil ought, however, to be adequate to sustain the present level of activity both in oil and other key areas.

It must be expected that the security for the oil industry will continue to be enforced. Libya is well aware that its oil reserves position is fair but not good and that it needs to protect those overseas companies which remain inside the country.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2010 Menas Associates

BP gets the go-ahead from NOC

Shokri Ghanem, chairman of Libya's National Oil Corporation (NOC), has released an official statement, posted on the company's web site, confirming that BP will be allowed to continue drilling for oil and gas in Libya.

The statement comes just days after BP announced that it has, so far, spent over $2billion in trying to clear up the oil spill in the Gulf of Mexico. Talking about the Mexico spill, Ghanem said that the disaster will not change NOC's "confidence" in BP or stand in the way of the deep-water drilling progress in the country.

The Libyan government signed an agreement with BP, back in 2007, which gave BP permission to explore for gas along an offshore tract. In view of the recent troubles BP has encountered in Mexico, there had been talk, among industry insiders, that Libya might void the terms of consent. However, Ghanem has praised the company by saying it had, "huge capabilities, long-standing experience and high-standard abilities," and that it will therefore "overcome the crisis."

BP has stressed the fact that the work in the Gulf of Mexico is ongoing, and that the process of extracting oil is expected to improve in the coming days. BP also said it was too early to determine the total cost of the damage, caused by the oil platform explosion.

Source: Bloomberg BusinessWeek

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For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.