Libyan oil companies now under UN, US and EU sanctions
By Margaret McQuaile, Robert Perkins, Stuart Elliott and Siobhan Hall
March 25, 2011 - Libya is now under three sets of international sanctions that do not directly target its exports of oil and gas but are likely to keep any shipments to a negligible volume or rule them out completely.
The United Nations Security Council on March 17 approved resolution 1973 setting up a no-fly zone over Libya and freezing the assets of various individuals -- including Moammar Qadhafi and members of his family -- and entities owned by the state.
The resolution named the National Oil Corporation but did not specify any of its affiliates.
The week ending March 25, the United States extended its own sanctions list to cover 14 Libyan oil companies, including Waha Oil Company, a joint venture between NOC and the former Oasis group -- Marathon, ConocoPhillips and Hess.
NOC holds a 59.16% working interest in Waha with ConocoPhillips and Marathon holding 16.33% each and Hess 8.13%.
Already on March 3 Marathon said it had stopped making tax and royalty payments to the Libyan government in accordance with US sanctions. It said it had some $760 million investment in property, plant and equipment in Libya.
Waha production was once as high as 1 million b/d but dropped off after US President Ronald Reagan ordered the American companies to leave in the 1980s.
Recent production had been running at around 350,000 b/d or some 22% of total Libyan production, estimated at 1.58-1.6 million b/d before the anti-government protests began in mid-February.
Although Waha is the biggest single producing concession in Libya, Italy's Eni is the biggest foreign oil operator in the country with 280,000 b/d of oil equivalent.
The US sanctions also targeted Arabian Gulf Oil Company, headquartered in Benghazi and which broke away from NOC early in escalating conflict to ally itself with the rebel National Transitional Council.
The European Union did not include Agoco in its latest additions to the sanctions list but did name NOC and five other companies: Azzawiya Refining, Ras Lanuf Oil and Gas Processing Company, Brega, Sirte Oil Company and Waha Oil Company.
Before the current crisis, Agoco's area of operations accounted for roughly 40% of Libyan crude oil output of around 1.6 million b/d. Agoco also operates an oil refinery and terminal at Tobruk.
Agoco, which has been appointed by the rebel National Transitional Council to lead a separate oil authority that would oversee activities in areas under rebel control, has been offering Sarir crude directly to European buyers, according to market sources.
These sources said offers from Agoco had been declined because of the complicated situation in Libya.
Although Waha is the biggest single producing concession in Libya, Italy's Eni is the biggest foreign oil operator in the country with 280,000 b/d of oil equivalent.
It had already halted its 115,000 b/d of oil production as the anti-Qadhafi protests deepened but had continued to produce some 10 million cubic meters/day of gas for domestic use in Libya.
It was not clear on March 25 whether, following the coming-into-law of the EU sanctions a day earlier, Eni had now halted this gas production.
On March 25, Eni declined to clarify the status of its Libyan gas production or say whether it believed it was subject to sanctions.
CEO Paolo Scaroni said March 11 that Eni had not shipped any oil cargoes from Libya since the first week of March and reiterated that the company would willingly halt its oil and gas dealings with the country if the EU decided to extend its sanctions.
Other European oil companies working in Libya include Total, Repsol, Austria's OMV and Germany's Wintershall. Wintershall, which has shut in all its in Libya, would not be drawn on the effects of the EU and UN sanctions.
"It is difficult at the moment to gauge the short- and medium-term developments in Libya, both economic and political. We are monitoring the situation there very carefully," a spokesman said.
Wintershall's two concessions, which it shares with Gazprom and NOC, produced up to 100,000 b/d before the unrest began.
International forces, empowered by resolution 1973 to use "all necessary measures" to enforce a no-fly zone and protect Libyan civilians and civilian-populated areas, began airstrikes on March 19.
Earlier the same day, Libya's top oil official, Shokri Ghanem, told a news conference in Tripoli that oil production has dropped below 400,000 b/d but that there were still some exports and that a 700,000 barrel cargo of crude was to load that day.
But Mediterranean market sources were unable to verify that any exports were now moving out of Libya.
Many companies had already pulled away from oil trade with Libya as the conflict worsened.
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