Oil and Gas

Libya separatists seen posing oil supply threat

* Nigeria-like risk from secessionists

* Nationalisation longer-term problem

* Libya is Africa’s fourth oil exporter, key Europe supplier

* European oil stocks slide, Eni, OMV among top losers

By Stephen Jewkes

MILAN, Feb 21 (Reuters) - Political turmoil in Libya could threaten energy exports to Europe if separatists in the oil-rich east of the country target infrastructure and look for a bigger slice of revenues, analysts said on Monday.

Libya is Africa's fourth-biggest oil producer and a key supplier for Europe. Italy, home to Libya's biggest foreign oil operator Eni ENI.MI, gets one fifth of its energy consumption from the North African country.

Ninety percent of Libyan oil exports come from the eastern region of Cyrenaica, epicentre of the revolt against strongman Muammar Gaddafi.

“There’s a real threat of instability as secessionists in the Cyrenaica area move,” said Stefano Casertano, senior fellow at German think-tank

“In 2009 there was an attempt to redistribute oil wealth to the Libyan people, but the reform was blocked and now it’s going to explode in their faces.”

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For more stories on Middle East unrest click[ID:nLDE71F0BK] For BREAKINGVIEWS on Libya, click on [ID:nLDE71K0R0] For graphics click For FACTBOX on oil companies in Libya [ID:nLDE71K0RV] Interactive factbox ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Libya’s oil wealth makes the uprising fundamentally different from the popular revolts that toppled leaders in Egypt and Tunisia, which are not top oil exporters.

Operators in Libya include Eni, BP BP.L, Royal Dutch Shell RDSa.L, Repsol REP.MC, OMV OMVV.VI and Statoil STL.OL. Many are repatriating staff. [ID:nLDE71K116]

“I have been following oil issues for 30 years and had not seen anything like what is happening now since the 1970s,” said Davide Tabarelli, head of energy think-tank Nomisma Energie.

“In the 1970s, it was all concentrated in a few countries, we had the war with Israel. Now it’s worse.”

Crude futures in New York were up 4.5 pct at $90.11 a barrel on fears the unrest could disrupt supplies.

Shares in the STOXX 600 oil & gas index were down on average 1.2 percent .SXEP, with Eni and Austria's OMV posting losses of around 5 percent.


The leader of the eastern Al-Zuwayya tribe in Libya has threatened to cut oil exports unless authorities halted what he called the “oppression of protestors”.

Sabotage of oil facilities has been a threat to supplies in Nigeria, Africa’s biggest oil producer, where rebel movements have struck plant belonging to Shell and Eni.

Christyan Malek, an analyst at Deutsche Bank, said Libyan secessionist groups could pose trouble but lacked critical mass.

“The military has run things with such an iron fist. It’s very difficult to see how this could suddenly gather momentum and ulimately end with nationalisation of the country’s reserves,” he said.

Fears that foreign operations could be nationalised is a longer-term concern in Libya, with the immediate concern damage to infrastructure. “Nationalisation is probably a long-term risk, but in the short term it’s not a question. In the short term, it’s destruction, as simple as that, along with disruption of supply,” said an oil analyst who declined to be named.

Eni, the biggest operator in Libya with 252,000 barrels of oil equivalent per day in 2009, said on Monday it was repatriating non-essential staff but added its operations are unaffected.

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).

UK oil major BP, 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.