CL Redux

http://news.yahoo.com/s/ap/20110227...DeW5fdG9wX3N0b3JpZXMEc2xrA2xpYnlhcmViZWxzZw--

Two prominent U.S. Senators said Washington should recognize and arm a provisional government in rebel-held areas of eastern Libya and impose a no-fly zone over the area — enforced by U.S. warplanes — to stop attacks by the regime.


U.S. Secretary of State Hillary Rodham Clinton echoed President Barack Obama's demand for Gadhafi to relinquish power.

"We want him to leave," she told reporters traveling with her Sunday to a U.N. meeting on Libya planned for Monday. "We want him to end his regime and call off the mercenaries and forces loyal to him. How he manages that is up to him."

 

Iraq Baji refineries

 

From an AP article:

"The chaos in Libya as it descends into virtual civil war has sent international oil prices skyrocketing despite a pledge from Saudi Arabia, the world's largest oil exporter, to ramp up exports. And that volatility is likely to continue, because it could take weeks or even months for Libyan production and exports to return to normal levels, experts said.

That has sent already over-caffeinated oil traders into a frenzy that won't calm down until there's more clarity about what is happening on the ground in Libya."

***********

I'll have to remember that description next time I meet someone new:

New acquaintance: "Nice to meet you! So what do you do for a living?"

Me: "I'm an over-caffeinated oil trader!"

 

That's funny.

 

http://www.msnbc.msn.com/id/41811575/ns/business-world_business/

By ALAN CLENDENNING

The Associated Press
2011-02-27T21:01:30

MADRID — Libya's oil industry is in chaos — and there's no telling when that will end.

Armed men loot equipment from oil field installations. British and German commandos execute secret raids in the Libyan desert to rescue stranded oil workers as security disintegrates rapidly in remote camps.

Libyan port workers, frightened of being caught up in Moammar Gadhafi's violent crackdown on protesters, fail to show up for work, leaving empty tankers floating around the Mediterranean Sea waiting to load crude.

And the European oil companies extracting Libya's black gold are operating in crisis mode, trying to get stranded expatriate workers out and safe amid conflicting information on how much oil is still being pumped and just where it all is.

That was just this week. The situation is not expected to get better in the near future.

No one knows whether Gadhafi or the rebels trying to oust him will end up controlling Africa's biggest oil reserves. Fears abound that Libya could turn into a fractured nation with competing armed groups ruling over rich and remote desert fields lying hundreds of miles (kilometers) apart from each other.

The chaos in Libya as it descends into virtual civil war has sent international oil prices skyrocketing despite a pledge from Saudi Arabia, the world's largest oil exporter, to ramp up exports. And that volatility is likely to continue, because it could take weeks or even months for Libyan production and exports to return to normal levels, experts said.

That has sent already over-caffeinated oil traders into a frenzy that won't calm down until there's more clarity about what is happening on the ground in Libya.

The International Energy Agency reported late Friday that Libya is probably still producing about 850,000 barrels of oil daily, down from its normal capacity of 1.6 million barrels — but acknowledged the estimate is based on "incomplete, conflicting information."

Libya produces just under 2 percent of the world's oil, but its customers are overwhelmingly European. Hardest hit by the sudden oil shortage are European refiners that receive 85 percent of Libya's exports, turning the country's highly valued crude into diesel and jet fuel.

The biggest buyers are Italy, France, Germany and Spain — and Spain is so concerned it announced Friday that highway speed limits will be reduced in March in a desperate bid to cut fuel consumption.

The biggest problem facing oil companies and European consumers who depend on Libyan oil is a near-complete breakdown in solid information. Phones in Libya rarely work, Internet is intermittent, workers are fleeing and looters are grabbing what they can or pose a threat until order is restored.

While British military planes staged daring desert rescues Saturday and Sunday of hundreds of oil workers, other workers were heading across the Sahara Desert in bus convoys toward the Egyptian border — a grueling trip.

One evacuee said the military plane he boarded in Libya was supposed to carry around 65 people, but quickly grew to double that.

"It was very cramped but we were just glad to be out of there," Patrick Eyles, a 43-year-old Briton, said at Malta International Airport.

The German air force also evacuated 132 people in a secret military mission, but thousands of other foreigners were still stuck in Tripoli by bad weather and red tape.

Spain's Repsol-YPF oil company announced Tuesday it had suspended operations in Libya, only to find out a day later that the oil fields it operates with other firms were still producing 160,000 barrels of crude daily. Still, that was less than half of the 360,000 barrels produced before the crisis began.

Despite reports that production was still under way in the vast Saharan desert Amal fields, Libyans never before permitted to approach the oil fields under Gadhafi's reign showed up armed and took anything they could — four-wheel drive vehicles, pumps, generators. One group came with a trailer and tried to remove a huge crane, said Gavin de Salis, chairman of Britain's OPS international oil field services company.

"Nobody shot anyone," De Salis. "But people were wandering around with guns saying 'Thanks, we'll take your vehicle since you're leaving anyway.'"

Two buses arranged by De Salis' company were ferrying 117 expatriate workers toward Egypt on Sunday, a trip expected to last 24 hours or more, and he said another bus was expected to take 25 expatriates out.

Even though production appears to be limping along — with Repsol reporting that Libyan oil workers are increasingly running operations as expatriates leave — the oil isn't getting out. The 320-mile (520-kilometer) natural gas pipeline under the Mediterranean from Libya to the Italian island of Sicily has been shut down for a week, with no guidance from its owner, the Italian energy firm Eni SpA, on when it might start pumping again.
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"Most Libyan ports are closed due to bad weather, staff shortages, or production outages," the IEA reported. Ports are key because Libya's crude heads abroad on tankers.

Major container ship companies have suspended deliveries or pickups from Libyan ports with no word on when shipments might resume. Tanker ships that deliver to Europe have been told to stay more than 100 miles (160 kilometers) offshore from some Libyan ports and await information on whether they can safely dock and take on oil.

The massive oil terminal at Brega, Libya's second-largest hydrocarbon complex, was nearly deserted over the weekend, with operations scaled back almost 90 percent because employees had fled and ships were not showing up.

The Brega complex, about 125 miles (200 kilometers) west of the rebel stronghold of Benghazi, collects crude oil and gas from Libya's fields in the southeast and prepares it for export. Since the crisis began Feb. 15, however, General Manager Fathi Eissa said production had dropped from 90,000 barrels of crude a day to 11,000.

With huge spherical storage containers and reservoirs rapidly filling up with oil and natural gas and no ships to take it away, production in the southern fields has been throttled back until Brega can clear some of its capacity.

The big oil companies have been mum on how the political situation may pan out, because they want to produce oil whether Gadhafi or someone else ends up in charge, and it's not worth it for them to risk alienating any of the groups vying for power, said Mohammed El-Katiri, a Middle East analyst at the Eurasia Group risk consulting group.

In a worst-case scenario, El-Katiri predicted it could take between four to six months to for Libya's domestic unrest to ease.
Story: Turmoil in Middle East spells trouble for your budget

"Such a scenario bodes poorly from an oil production point of view on two counts: Not only will it compromise production with Gadhafi still in power, but ongoing violence could further complicate the ability of a post-Gadhafi political order to emerge in a manner that creates a stable domestic security environment," El-Katiri said.

Repsol's chairman, Antonio Brufau, told reporters he would get his last expatriate workers out using bicycles if necessary — and El-Katiri said oil companies won't send them back in until they know it's safe. De Salis said some expatriates could return without a functioning central government but only if local security situations improve.

Leaving oil fields deserted in Libya creates even more security problems. In Nigeria, opportunistic villagers, rebels or pirates often tap pipelines in a dangerous bid to steal fuel, leaving many killed or maimed in accidents and pipelines compromised by sabotage.

About the only positive sign for Libya's oil future is that experts believe both Gadhafi and the rebels want to restart suspended oil operations as quickly as possible because they covet Libya's oil wealth.

"For Gadhafi, the money helps because he can keep on paying his militias and mercenaries to keep them fighting and loyal," El-Katiri said.

The rebels, meanwhile, don't want to alienate Western governments that depend on Libyan oil, he said, and also need money to be strong enough "to resist attacks by Gadhafi."

Copyright 2011 The Associated Press. All rights reserved.

 

Feb. 26, 2011, 3:50 p.m. EST

Petrobras CFO: Oil surge may lose steam
Brazilian state-run oil giant posts double-digit rise in quarterly profit

By Carla Mozee, MarketWatch

LOS ANGELES (MarketWatch) — International oil prices could drop as far as $70 a barrel when the North African region and the Middle East see a calming of the civil unrest that has disrupted oil production in Libya, the chief financial officer of Brazilian oil giant Petroleo Brasileiro SA said Friday.

The front-month crude contract earlier this week breached the $100-a-barrel mark for the first time since late 2008 as oil output from Libya dropped amid violent anti-government protests and as investors worried about possible supply disruptions in other North African nations and the Middle East.

“I don’t see the case that is happening in North Africa as an extended situation,” said Petrobras’s Almir Barbassa in a telephone interview with MarketWatch following the release of the company’s report of a nearly 40% rise in fourth-quarter profit.

Petrobras (BOLSA:BRETR4) (NYSEBR) is one of the world’s largest energy companies and one of the largest companies in South America. Petrobras is aiming to become one of the world’s top oil producers and exporters through the development of its massive reserves off the coast of Brazil.


Almir Barbassa, the chief financial officer of Petroleo Brasileiro SA, the state-run oil company.

“After everything comes to their proper place, oil prices will come down to below $100 ... to between $70 to $90 in the short- to medium-time.”

The light crude continuous contract last traded in the high $70-a-barrel range in late September.

Oil prices climbed 14% this week, the biggest weekly percentage gain since January 2009. Light, sweet crude for April delivery (NEW:CLJ11) on Friday closed up 0.6% to $97.88 a barrel on the New York Mercantile Exchange, but had eased during the session following reports that Saudi Arabia had increased its output by 8% to help offset the decline in Libyan output.

Libya sits on the largest oil reserves in North Africa, and output has dropped since the acceleration of protests seeking to oust Moammar Gadhafi after 42 years in power. Italy’s Eni SpA (NYSE:E) , the largest foreign oil producer in Libya, has suspended some of its oil and gas activities there. Other companies that have suspended or reduced activity in Libya include BP PLC (NYSE:BP) , Canada’s Suncor Energy Inc. (NYSE:SU) Norway’s StatoilHydro ASA (NYSE:STO) and OMV AG (PINK:OMVKY) of Austria.

Libya is the latest flashpoint in a wave of antigovernment protests that has swept through the Middle East and North Africa since December. An uprising in Tunisia resulted in the January resignation of President Zine El Abidine Ben Ali, and protests in Egypt led to the resignation Hosni Mubarak as president earlier this month. Protests have also taken broken in Bahrain, Djibouti, Iraq, Iran, Jordan, Morocco and Yemen.

Brazil isn’t in a position to help make up for Libyan-related oil shortages, said Barbassa.

“We are producing as much as we can, and, of course we plan to increase production as we did last year … but we don’t have spare capacity in terms of well-connection and drill-connection to our production facility to turn on the valve and start flowing oil,” he said. “Of course, a little bit more could be done, but not in volume that could make any difference to the world’s demand.”


Barbassa also he doesn’t expect production facilities in Libya to have sustained much damage. If they did, he said, it could keep oil above $100 a barrel. But “even with some damage, it can be repaired very shortly,” he said.

Petrobras this week pulled four of its employees out of Libya’s capital city of Tripoli and said that it was monitoring the situation of its nearly 15 workers that remained in the country.

Petrobras has been in Libya since 2005, according to its Web site. The company has exploratory oil and gas rights, and shared production rights, in an area in the northeastern portion of the Libyan coast. Petrobras operates a consortium that’s exploring the area and holds a 70% equity stake.

For its fourth quarter, Petrobras posted profit that surpassed analyst expectations. Earnings jumped 38% to 10.6 billion reals ($6.38 billion) from 7.66 billion reals from the year-ago period, helped in part by higher oil prices. Analysts polled by Dow Jones Newswires had expected the company to report net earnings of 9.2 billion reals.

Revenue for the period rose 14% to 54.59 billion reals from 47.69 billion reals in the same quarter last year. Earnings before interest, taxes, depreciation and amortization came in at 14.58 billion reals, up from 14.32 billion reals.

Barbassa said the company has raised its oil production target by about 5% to 2.1 million barrels a day for 2011, and that it plans to start production on 60 new offshore wells this year. Twenty of those wells will be in the potentially lucrative pre-salt region in the Santos Basin. The deepwater area runs roughly 500 miles along the country’s Atlantic coastline.
Will crude oil stay at $100 a barrel?

Oppenheimer Senior Oil & Gas analyst Fadel Gheit talks about the outlook for energy prices with unrest growing across the Middle East.

Last year, Petrobras conducted the largest sale of shares on record, raising roughly $70 million as part of its plan to raise funds for its $224 billion investment program that runs through 2014.

Petrobras still plans to raise $46 billion via the debt market up through 2014, said Barbassa. He said $29 billion will be for funds to pay maturing debt, and $17 billion is “new money.”

But Petrobras is “very comfortable,” stressed Barbassa, citing cash reserves of 55 billion reals ($33.08 billion) at the end of 2010. “Our net debt will be paid with one year of EBITDA. So we have room to get more money from debt issuance.”

Preferred shares of Petrobras closed Friday’s session up 0.8% ahead of the financial results. The shares are up nearly 5% so far this year.

 

Could see as much as 115 bid on the Brent contract tommorow.

I'm not expecting another day like Thursday tommorow, but thank fuck the weekend is over. Now we can get back to doing what we do best.

 

In 99.05. Out at 99.36. Might have another run in it. Have to put on my tux and accept my academy award. I greatly appreciate all of your votes.

 

Long from this 99 level should provide good support today
Let us see if 100.89 Limit SELL get executed some time today

 

Never wear your tux at home for trading unless you have been drinking an effective amount of vodka.