_468x60px.jpg)
Opposition-controlled oil production stops after Libyan regime's raids
Military forces loyal to long-time leader Muammar al-Qadhafi have been successful in moving into the easternmost rebel-controlled oil areas.IHS Senior Middle East Energy analyst Samuel Ciszuk reports.
While Libya's opposition movement this week was successful in — with the blessing of the international community — exporting its first independently sold crude cargo from the easternmost oil terminal of Marsa El-Harigh, it seems military forces loyal to long-time leader Muammar al-Qadhafi have been successful in moving into the easternmost rebel-controlled oil areas and launching raids to disrupt oil flows.
While the territorial control situation in the desert areas of Libya's prolific central and eastern Sirte Basin remains very fluid, it seems the Libyan regime-loyal armed forces have moved into the Waha area in the centre of the opposition-controlled part of the oil region over the last two weeks, establishing a foothold from which raids on surrounding oilfields and transport infrastructure can be mounted.
While production at most oilfields in Libya has been completely shut-in, or kept at just a trickle of normal flows, the rebel-controlled Arabian Gulf Oil Company (AGOCO), which used to be a subsidiary of Libya's National Oil Corp (NOC), has tried to keep production flowing at least partially from two fields, the Sarir and Messla complexes, claiming that they have managed to keep production at around 100,000-120,000 b/d.
Attacks this week have, however, cut off flows through the pipeline connecting the Sarir field with the Marsa El-Harigh terminal, while an attack, including a fire in at least one tank on the Messla field, destroyed some facilities there.
Some production or treatment installations have also reportedly been damaged at the Sarir field. In addition to this, government forces attacked the Amal 103 field operated by the Zueitina Oil Company in which the United States' midsize Occidental has a stake, although production at that field has been shut-in since soon after unrest started.
At least three AGOCO workers have been killed in the attacks, with AGOCO's information manager, Abdeljalil Mayuf, telling Reuters that the oilfields only were lightly protected, saying "if we had defences, we wouldn't ask NATO. We don't have heavy guns or heavy equipment now", amid calls for NATO to more actively protect the oilfields and try to dislodge government troops from the area. He also added that AGOCO still had about 2 million barrels in storage at Marsa El-Harigh to sell. "The fields have been damaged and I think that all exports will be halted till these fields are repaired", Colonel Saleh al-Mansour, in charge of humanitarian affairs at the rebel-led National Transitional Council, clarified to Platts.
Libya's oil industry, regardless of which side is in control of it, is currently suffering a massive skilled worker shortage and it might be hard for AGOCO to quickly repair damaged facilities, especially with government forces on standby in the vicinity to carry out new raids. Hitherto, the government has been careful not to cause permanent damage by torching oil wells or causing wellhead leaks and reservoir pressure falls, however, if fighting escalates in the oil areas, such care and precision might be impossible to maintain. Certainly NATO would be wary to start bombing targets in the Waha field complex, where US companies ConocoPhillips, Marathon and Hess, hold large shares. On balance this does not bode well for the rebels' ability to maintain sustained crude exports.
BG Group is planning a USD300-million investment programme to develop its Tunisian assets, in what should be regarded as a strong re-affirmation of the company's belief in both the country's upstream sector as well as in its future political stability and leadership, following the ouster earlier this year of long-time president Zine al-Abidine Ben Ali.
Sami Iskander, the executive vice-president and managing director of BG Africa, Middle East and Asia, unveiled the package during a meeting with Tunisian prime minister Beji Caid Essebsi yesterday (7 April), saying that the programme would focus on maintaining output at the Miskar and Hasdrubal gas fields and continue exploration and maintain platforms in its offshore acreage outside the southern town of Sfax. Iskander told Reuters that the situation in the Tunisian oil and gas industry had improved since the widespread strikes and protests early this year impacted the operations of most upstream players. It was also reported that BG Group recently had signed an agreement with local communities in Tunisia in which it pledged to create 120 new jobs as well as to establish a USD2-million fund offering micro-credits and financing for social investments.
So far, BG Tunisia has invested about USD2.5 billion in the country, according to Reuters, making this year's investment programme a considerable step up in its pace. For Tunisia, the continued commitment of one of its most important upstream players is very good news, as a new political leadership is trying to find its bearings and return Tunisia to the international markets as a foreign direct investment destination.
Political turmoil in the wake of the former regime's demise has hitherto frustrated a swift return and meant that its important tourism sector continues to suffer heavily from low visitor numbers, so attracting a significant upstream investment package could be hoped to attract others as the political system hopefully calms down. BG Group is responsible for the production and piping of around 50 per cent of Tunisia's natural gas, making it a truly strategic player and the importance of it investing in maintaining its output capacity over the long term, and potentially even growing, is crucial for the mature producing country in helping it put off having to rely more on energy imports in the future.
New Egyptian leadership faces challenge
A group of petroleum engineering graduates are continuing a long round of protests and demonstrations outside the headquarters of the Egyptian Natural Gas Holding Company (EGAS) in Cairo, Egypt's capital, Gulf Oil & Gas reports. The students are demanding the materialisation of job opportunities promised by former oil minister, Sameh Fahmy during the last weeks of the now-toppled regime under former president Hosni Mubarak. Military police are guarding the offices of the state-owned upstream gas company, while the ranks of the protestors have been swollen by others who had been demonstrating outside the Petrotrade offices after their job applications were rejected.
During the protests that eventually toppled the former regime, oil workers and unemployed young graduates launched demonstrations against the state-owned oil and gas industry, which kept large numbers of its non-skilled, but also skilled workers on short-term contracts for years on end, as a way of putting a lid on demands for higher pay.
As pressure built on then-oil minister Fahmy, he promised to radically raise the number of full-time employees, as well as create new employment opportunities for Egyptian graduates, a programme which might be expensive and complicated to implement in practice, however, as Egypt's new leadership is trying to come to grips with a national economy that took a hard hit from the two to three months of unrest at the start of the year.
With expectations high among both workers and prospective workers in the oil industry that everything will now change for the better, the new leadership is likely to face significant and potentially destabilising challenges ahead, as it will have to navigate between restoring fiscal soundness and meeting radical demands for change and higher pay.
For more information, visit www.ihs.com
