OIL PRODUCTION:THE INTERNATIONAL military intervention in Libya risks prolonging the shutdown of north Africa's most productive oilfields as well as reprisals by Muammar Gadafy's regime against foreign energy assets.
Oil has risen to a two-year high during the month-long conflict between government forces and rebels. Prices may gain today after the US, UK and France launched cruise missiles and air strikes at targets in Libya this weekend, said John Sfakianakis, chief economist at Banque Saudi Fransi.
Libyan oil production has fallen to fewer than 400,000 barrels a day, about a quarter of its level before the crisis, and may stop altogether, Shokri Ghanem, chairman of Libya’s National Oil Co, said on March 19th. Italy’s Eni SpA, the biggest foreign oil company in Libya, evacuated the last of its expatriate staff after the United Nations authorised military action against Gadafy.
“The biggest risk for oil companies involves possible damage to their facilities which would make it harder to bring production back up once the conflict ends,” said Alessandro Marrone, a defence analyst at the IAI Institute of International Affairs in Rome.
“Western oil companies will have to hope Gadafy does not destroy their facilities,” said Johannes Benigni, chief executive officer of consultants JBC Energy GmbH in Vienna.
Gadafy threatened to replace western oil firms with companies from India and China in a March 2nd speech. More than 10 days later he discussed possible investments with the ambassadors of the two countries and Russia, state- run television reported. – ( Washington Post-Bloomberg)