Monday, February 21, 2011

Libyan Oil Production

If you haven't heard, things aren't going too well for the Libyan regime:
The faltering government of the Libyan strongman Col. Muammar el-Qaddafi struck back at mounting protests against his 40-year rule, as helicopters and warplanes besieged parts of the capital Monday, according to witnesses and news reports from Tripoli.

By Monday afternoon, a witness saw armed militiamen firing on protesters who were clashing with riot police. As a group of protesters and the police faced off in a neighborhood near Green Square, in the center of the capital, ten or so Toyota pickup trucks carrying more than 20 men — many of them apparently from other African countries in mismatched fatigues — arrived at the scene.

Holding small automatic weapons, they started firing in the air, and then started firing at protesters, who scattered, the witness said. “It was an obscene amount of gunfire,” said the witness. “They were strafing these people. People were running in every direction.” The police stood by and watched, the witness said, as the militiamen, still shooting, chased after the protesters.

The escalation of the conflict came after Colonel Qaddafi’s security forces had earlier in the day retreated to a few buildings in the Libyan capital of Tripoli, fires burned unchecked, and senior government officials and diplomats announced defections. The country’s second-largest city remained under the control of rebels.

Security forces loyal to Mr. Qaddafi defended a handful of strategic locations, including the state television headquarters and the presidential palace, witnesses reported from Tripoli. Fires from the previous night’s rioting burned at many intersections, most stores were shuttered, and long lines were forming for a chance to buy bread or gas.
and there seems significant potential for Libyan oil production to be affected:
Global oil companies said Monday that they were making plans to evacuate employees in Libya after some operations there were disrupted by political unrest. Libya holds the largest crude oil reserves in Africa, and the moves drove some stock prices down and a crucial oil benchmark to a three-year high.

The largest and most established foreign energy producer in Libya, Eni of Italy, said in a statement that it had begun repatriating “nonessential personnel” and the families of its employees.

The Norwegian energy company Statoil, which operates in Libya in partnership with Repsol of Spain and Total of France, said that it would close its office in Tripoli and that a handful of foreign workers were leaving. “The safety of our personnel is our main priority,” said a spokesman, Bard Glad Pedersen.

OMV of Austria, which produces about 34,000 barrels of oil a day in Libya, said it planned to evacuate 11 workers and their families, leaving only essential staff.

Shares in Eni and OMV dropped Monday, while the price of Brent crude, an important benchmark for oil traded in London, rose to $104.60 a barrel, the highest level since 2008.
As background, here is a quick graph of the history of Libyan oil production, from two sources - the EIA and JODI) (I will add data from the IEA and OPEC when I get a chance).

It will be very interesting to see what happens in current months. If indeed production drops due to increasing chaos in the country, this is certainly enough oil to make a noticeable difference in global oil prices. Unless, that is, the rest of OPEC is willing and able to make up the difference.

1 comment:

Emil said...

Ah, our 'friends the Saudis' surely will come to the rescue.

Oh, wait... will they?

The 'best' part?

Saudi Arabias production may be quite high but it's net exports actually fell, by over 300 k barrels/day.

Brent's close to 106 now.
It wasn't this high in 2008 at this stage and you've got the coming food shock coming up in part because of horrendous harvests in Russia, China et al.

This year will be an eventful year, particularly in poor places.

As I've said before, people underestimate the likelyhood of a Libya happening as oil and food prices climb which in themselves create instability and the risk is political disruptions.

Some people think the decline will follow a mostly geological line. We might well peak very shortly mainly due to political factors, if we haven't peaked geologically already, which the German military already says we did(in 2010).

It increasingly looks like they're right. Saudi Arabia's steadily losing the amount of oil it can export.