By BENOIT FAUCON
Shots fired at an oil tanker and accusations of attempted
thefts at port facilities have deepened a crisis in
Libya's oil industry, triggering fears among major Western oil
companies that one of Europe's largest suppliers could soon
descend into lawlessness.
Strikes by security guards in eastern and central Libyan
ports that started at the end of July have effectively shut
down shipments from terminals there, which account for more
than half of Libya's $60 billion of oil exports annually.
As a result, storage facilities have filled with crude,
crimping any new production. According to data supplied by the
Oil Ministry, Libya's output fell in the first half of August
to about 500,000 bpd about one third the highs reached last
summer and the lowest level since just after Libya's civil war
ended in late 2011.
Though the port closures were started by workers demanding
the payment of wages owed as well as higher wages or more jobs,
Libyan officials say the situation there is now turning into an
occupation and that the armed guards are trying to sell oil
without government approval.
As evidence, Libyan officials said a major international
commodities trading house had recently received an offer to
purchase Libyan oil outside official channels, which the
company refused and reported to authorities.
It's not a strike. It's a coup, a manager at a company
running one of terminals said.
The Navy Special Forces, which acts as a coast guard, posted
video showing its members firing from a Navy ship at an
unauthorized tanker as it approached the country's largest oil
terminal, Es Sider, in central Libya early this week. There was
no sign that the tanker was damaged or suffered casualties, but
it retreated from the area.
The developments illustrate how Libya's oil industry, once a
tightly run stalwart of supply to Europe, is in danger of
joining the ranks of countries whose industries are marred by
unrest, theft or corruption.
The situation in the country remains volatile, and we cannot
exclude further disruptions in the second half, Eni's CEO,
Paolo Scaroni, said at the Italian oil company's Q2 earnings
conference on August 1, 2013.
He lumped the North African nation with Nigeria as the two
areas where it faces "uncertainties" in future production.
Like Nigeria, Libya has a prevalence of weapons, a lack of
jobs for locals and militias that are demanding stronger
regional control of oil revenue. Those factors have created the
potential for lawlessness, leading to entrenched oil theft,
said Peter Hutton, a London-based analyst at the Royal Bank of
Libya's problems are at "a nascent stage," he said, with its
open deserts making systematic theft through sabotage less
likely than in Nigeria's swamps.
But Libya's insecurity is already damaging investment in the
country, which holds Africa's largest oil reserves, said Geoff
Porter, head of North Africa Risk Consulting Inc.
Royal Dutch Shell said last year it was exiting its Libyan
exploration blocks. Marathon Oil
recently signaled it would like to sell its interest there,
according to Libyan oil officials. Marathon declined to
For those who stay, investment prospects may be severely
curtailed. In the light of recent events, "I expect we will
freeze everything in the budget in 2014," said a senior manager
at a foreign oil joint venture.
The new wave of unrest in Libya comes as violence has
gripped other countries in North Africa that play a large role
in producing and transporting oil, including the terrorist
attack and hostage standoff in January at the In Amenas natural
gas facility in Algeria, and the recent deadly military
clashes with Muslim Brotherhood protesters in Egypt.
In recent days two terminals near the eastern cities of
Brega and Tobruk have restarted operations. But three others
remain blocked, including Es Sider.
On Tuesday, a Libyan official revealed that oil trader Vitol
Holding BV and other large companies had received an offer to
buy Libyan crude outside official channels. Vitol refused the
offer and told Libyan authorities, the official said. Vitol
declined to comment on the matter.
Prime Minister Ali Zeidan last week accused Ibrahim
al-Jathran, the leader in the central region of
the Petroleum Facilities Guard, of having tried to sell
oil without approval.
Mr. al-Jathran, who was subsequently dismissed, couldn't be
reached for comment. A spokesman for the Petroleum Facilities Guard said he was now
wanted by the Libyan authorities.
Mr. Zeidan also warned that any vessel approaching Libyan
ports without clearance "will be bombed from the air and the
sea," according to his official website.
The Liberia flagged tanker, the A Whale, had come from Port
Said, Egypt, according to the shipping tracking website
The vessel wasn't on the official list of authorized
shipments from the port, which exports oil from concessions run
by Libya's National Oil Company with ConocoPhillips, Hess and
Marathon, according to Libyan officials.
The tanker left the area of Es Sider after being stopped but
remained offshore Libya, according to MarineTraffic.com. A
Whale is owned by a global shipping group called Today Makes
Tomorrow, or TMT, Group, with roots in Taiwan.
The crew of the vessel, which was used to skim oil during
the Deepwater Horizon oil spill in the United States, and a
company spokesperson didn't respond emails and couldn't be
reached over the phone. Staff at Bracewell & Giuliani LLP,
a law firm representing TMT in a Houston bankruptcy court,
declined to comment on the vessel.
Clashes also broke out at another closed terminal, Zueitina,
between striking workers and opponents of the shutdown, another
oil official said. Before the closure, Zueitina shipped
production from fields partly owned by OMV and Occidental
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