* Oil production down 50 pct to around 600,000 bpd-industry
* Exports less than half of pre-disruption levels
* Es Sider, Ras Lanuf, Zueitina export terminals still shut
* Fresh protests in the east target oilfield output
By Julia Payne
LONDON, Aug 8 Unrest that has already slashed
Libya's oil output to the lowest levels since the 2011 civil war
and more than halved its exports is now spreading, with serious
implications for its economy, foreign companies and consumers of
In the latest development, field workers at its Arabian Gulf
Oil Company (AGOCO), with complaints over management, said late
on Wednesday they would cut output by 10,000 barrels per day
(bpd) every day their demands are not met.
They join a wave of strikes by oil workers and protests by
people demanding work, that began in late July, shutting down
the two largest terminals of Es Sider and Ras Lanuf.
The Zueitina port has been closed since mid-July, while
workers at Libya's biggest refinery, at Ras Lanuf, are also on
Now, with the onset of the Muslim festival of Eid al-Fitr, a
trader with a foreign oil company said he did not expect either
talks or oil flows to restart before Sunday.
"Eid started last night so there won't be any resolution
during this period. Meetings and negotiations will take place
afterwards," a trader with another oil major said on Thursday.
Libyan officials were not immediately available to comment.
Meanwhile production in Libya is now around 600,000 bpd,
roughly half of July's level, an industry source familiar with
Libya's operations estimated. The country has a production
capacity of around 1.6 million bpd.
Exports to world markets remain at just under half of
pre-disruption rates of about 1 million bpd.
Eastern Libya, with 80 percent of the oil, has seen the most
protests as locals seek more influence over the sector.
MEDIUM TERM ISSUE
Although oil provides 95 percent of Libya's revenues,
analysts say its economy can manage for a while.
"They are not that straightened because they have
significant (monetary) reserves. It would take a couple of
months of zero exports before they would not be able to pay for
things. It's a medium term issue," said Crispin Hawes, director
of Middle East and North Africa at consultancy Eurasia Group.
Prolonged shut-downs would risk crippling state finances.
The roughly $51 billion budget for this year is strained by
subsidies and spending on salaries partly to thousands of former
fighters from the war that overthrew Muammar Gaddafi. Prime
Minister Ali Zeidan has asked for an extra $11 billion.
Before the latest disruption Libya's oil exports brought in
about $4 billion a month.
Another serious problem down the line could be the impact
the disruption is having on foreign investors, who had been
pleasantly surprised by the country's quick production recovery
last year. Production reached just under its pre-war level of
1.6 million barrels one year after the conflict.
But the continuous outages since then have reduced the
appeal of upstream investments. In an early sign, Marathon Oil,
for example, is studying the potential sale of its stake in the
Waha Oil Company.
Italy's Eni is the biggest foreign operator in
Libya with around one third of the country's output.
Eni has said last week its output came in below targets in
the first and second quarters because of Libyan unrest making it
lose some $2 million a day in lost production.
"The situation in the country remains volatile and we cannot
exclude further disruptions in the second half," CEO Paolo
Germany's Wintershall, owned by BASF, was the
second largest foreign oil firm in Libya but its producing
assets have not returned to pre-war levels.
Austria's OMV and Spain's Repsol had to
temporarily shut in production due protests in early July.
Other players include Total, ConocoPhillips
, Hess, Marathon, and Suncor.
There is a risk to Libya's reputation as a supplier that
could prove costly.
"If Libyan supply consistently comes to be viewed as
unreliable, then Libya will be forced to discount their crude
prices for their customers," Hawes at Eurasia said.
Europe's refineries are already finding themselves short of
Libya's prized light sweet crude this summer, pushing up the
prices of alternatives such as Azeri or Kazakh oil.
Although Libya, even at full production, is only ranked
around ninth of OPEC's 12 producers, the supply interruptions
has lent extra support to benchmark Brent crude oil futures
and therefore to world energy prices.
Libyan officials have repeatedly suggested that a resolution
is close, but the oil sector's difficulties are part of a wider
problem of labour strife and security issues across the economy.
On Monday, Oil Minister Abdelbari al-Arusi said oil output
has improved to around 700,000 barrels a day and was expected to
reach 800,000 bpd after Eid as the government sought to settle
Instead, production fell again, and the major fields
producing Es Sider, Amna and Sirtica crude were shut in on
Tuesday due to the prolonged port closures.