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Libyan crude oil shipments are set to slide in the coming days
as mounting violence, falling oil output, the impact of sanctions and rising
freight costs take their toll on Africa’s third-largest producer.
As fighting continues across Libya, the oil industry is trying
to assess the output lost. Most estimates have suggested around half of the
country’s 1.6 million barrels per day (bpd) of oil capacity is out of action.
But the International Energy Agency said on Friday one million
bpd of production was currently shut as foreign oil firms evacuate their
workers.
“There has been a massive flight of skilled workers,” said
Samuel Ciszuk, senior analyst with IHS Energy.
“You now have a situation where everything is pointing towards a
more or less complete shutdown of Libyan production.”
At least 4.4 million barrels of crude sailed from Libyan ports
last week on tankers. But shipping sources said the export momentum was fading,
adding that a number of shipments had been cancelled in the past few days.
“You are definitely seeing a slowdown in activity,” a ship
broker said. “At the end of last week deals have been a lot more flaky — it’s
a combination of nervousness and people taking stock of the various sanctions.”
Western countries, the European Union and the United Nations
have imposed sanctions on Libya and frozen government assets after forces loyal
to leader Muammar Gaddafi fired on protestors.
The Swiss branch of Libyan oil company Tamoil told Reuters last
week U.N. sanctions could affect the group’s ability to source crude and that
high oil prices had forced it to cut refinery runs.
There were also indications that tankers were leaving Libya
without crude onboard. A tanker owned by Iranian tanker company NITC left a
Libyan port without a cargo, an NITC spokesman said.
Separately, Danish owner and operator Torm said one its tankers
left Libya without loading a cargo.
“They were not able to get hold of the cargo,” a Torm spokesman
said, without giving further details.
Libya’s top oil official estimated last week oil output by the
world No.12 exporter had fallen to 700,000-750,000 bpd.
Falling output
Ship brokers and analysts said the amount exported in oil
tankers was most likely to have been taken from storage tankers or from
existing pipeline supplies.
Sources said the growing costs involved in Libyan oil shipments
was also making deals more unattractive, with more buyers seeking alternative
crude oil sources including Nigerian or Saudi Arabian stocks.
“When ship owners are quoting Libyan cargoes they double or
triple the freight rate due to uncertainties,” a second ship broker said.
Tanker rates on the benchmark cross Mediterranean route rocketed
up to their highest in more than nine months last week to nearly $50,000 a day
before retreating to $41,197 a day on Friday, Baltic Exchange data showed.
Expectation of higher insurance costs is another growing factor,
shipping sources said. London’s marine insurance market added Libya to a list
of areas deemed high risk.
“The key thing at the moment is insurance and it’s expensive for
people to call at Libyan ports,” a ship broker said. “The Lloyd’s market move
is bound to have an impact.”
