Libya unrest stops oil drilling, majors remove staff
Pro-government supporters chant slogans in favour of Libyan leader Muammar Gaddafi in the capital Tripoli, February 21, 2011.
Credit: Reuters/Libya TV via Reuters TV
By Vera Eckert and Daniel Fineren
FRANKFURT/LONDON | Mon Feb 21, 2011 11:10am EST
FRANKFURT/LONDON (Reuters) - Spreading unrest in Libya shut down 6 percent of oil output in Africa's No.3 producer and prompted a host of energy firms to pull out international staff, sending oil prices to above $105 a barrel.
Wintershall, the oil and gas exploration arm of BASF BASF.DE said on Monday it was winding down Libyan oil production of as much as 100,000 barrels per day (bpd).
A host of companies, including Royal Dutch Shell (
RDSa.L), ENI (
ENI.MI) and OMV (
OMVV.VI) said they were withdrawing expatriate staff.
The firms acted as dozens were reported killed in Tripoli as anti-government protests reached the capital for the first time and Benghazi, Libya's second city, appeared to have slipped out of control of forces loyal to Muammar Gaddafi.
Brent crude rose above $105 a barrel to 2-1/2 year highs on the unrest in Libya, most of whose oil exports flow to Europe and which pumps about 1.6 million bpd of crude oil, making it Africa's third-largest producer after Nigeria and Angola.
"The market is on edge about the potential for Middle East and North Africa supply disruptions," said Mike Wittner, Head of Commodities Research, Americas, at Societe Generale.
"If you've got reports that actual disruptions are starting to occur, it's going to have a supportive impact. A lot of it is high-quality crude and that is important as well."
Libya's oil is priced against European benchmark Brent crude, which traded as high as $105.08 on Monday, its highest since September 2008.
Oil industry and shipping sources said there was no sign of disruption to export flows from Libyan ports. Most of Libya's oil production operations are located in the east of the country south of Benghazi.
MOVING OUT STAFF
Wintershall was the only company initially to disclose an impact on oil output, but several other firms said they were stopping other work or pulling staff out of Libya.
Britain's BP (
BP.L), which does not produce oil or gas in Libya but has been readying an onshore rig to start drilling in the west of the country, has suspended operations because of the escalating violence.
"We are looking at evacuating some people from Libya, so those preparations are being suspended but we haven't started drilling and we are years away from any production," a BP spokesman said, adding BP has about 40 staff in the country.
Shell, whose operations in Libya are also limited to exploration, has temporarily relocated the dependents of expatriate staff outside the country, a spokesman said, declining to comment further on operations.
Austrian oil and gas group OMV (
OMVV.VI) said none of its operations in Libya have been affected but that it was withdrawing expatriate staff.
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One of Gaddafi's sons, Saif al-Islam Gaddafi, appeared on television delivering a rambling address in which he repeatedly said Libya was "not
Egypt or Tunisia", neighbouring countries whose strongmen were swept from power in recent weeks.
Wagging a finger at the camera, he blamed Libyan exiles for fomenting the violence, promised dialogue on the Libyan constitution and warned of bloodshed if the situation slipped further out of control.
In Benghazi, Habib al-Obaidi, head of the intensive care unit at the main Al-Jalae hospital, said the bodies of 50 people, mostly killed by gunshots, were brought there on Sunday afternoon.
The deaths came after scores were killed on Saturday. Two hundred wounded people had arrived, 100 of them in serious condition, he said.
"The problem is not the number of those killed but how they were killed. One of the victims was obliterated after being hit by an RPG to the abdomen," he said.
Members of an army unit known as the "Thunderbolt" squad had come to the hospital carrying wounded comrades, he said. The soldiers said they had defected to the cause of the protesters and had fought and defeated Gaddafi's elite guards.
"They are now saying that they have overpowered the Praetorian Guard and that they have joined the people's revolt," another man at the hospital who heard the soldiers, lawyer Mohamed al-Mana, told Reuters by telephone.
Human Rights Watch said the death toll had reached 233 killed in five days of violence.
TRIBAL THREATS
In a rare sign of dissent, Libya's representative to the Arab League quit in protest over "oppression against protesters", Al Jazeera television reported.
The leader of the Al-Zuwayya tribe in eastern Libya, Shaikh Faraj al Zuway, threatened to cut oil exports to Western countries within 24 hours unless authorities stopped what he called the "oppression of protesters".
Akram Al-Warfalli, a leading figure in the Al Warfalla tribe, one of Libya's biggest, told Al Jazeera: "We tell the brother (Gaddafi), well he's no longer a brother, we tell him to leave the country."
Libya is a major energy producer with significant investment from Britain's BP Plc (
BP.L), Exxon (
XOM.N) of the United States and
Italy's ENI (
ENI.MI) among others.
Communications are tightly controlled and Benghazi is not accessible to international journalists, but the picture that has emerged is of a city slipping from the grasp of security forces in the biggest challenge to Gaddafi's rule since the "brotherly leader" seized power in a 1969 military coup.
Sunday's violence took place after residents took to the streets in their thousands to bury scores of dead killed in the previous 24 hours. The United States said it was "gravely concerned" by what it called credible reports hundreds of people had been injured or killed.
A leading tribal figure in the city who requested anonymity said security forces had been venturing out of their barracks and shooting protesters in the street.
Clashes were taking place on a road leading to a cemetery where thousands had gone to bury the dead. Buildings were on fire, he said.
One witness said thousands of people had performed prayers in front of 60 bodies laid out in Benghazi in the morning. Women and children were among hundreds of thousands that came out onto the Mediterranean seafront and the area surrounding the port.
(Additional reporting by Hamid Ould Ahmed in Algiers, Suleiman al-Khalidi in Amman,
Tom Heneghan in Paris; Writing by
Christian Lowe and Marie-Louise Gumuchian; Editing by Diana Abdallah and
Jon Boyle)
SOURCE:
UPDATE 10-Libya unrest spreads to Tripoli, Benghazi erupts | Reuters