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 Canada.
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 comment.
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 MarineTraffic.com.
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 Petroleum.
Dow Jones Newswires