Libya output still at 600,000 bpd, protests drag on

Reuters

* Insecurity curtails production in eastern Libya

* Seven U.S.-based firms have left or sold stakes in N.Africa

* Oil law is expected to ready by early next year

By Patrick Markey and Tarek Amara

TUNIS, Oct 22 (Reuters) - Libya's oil production is stableat around 600,000 barrels per day (bpd), where it has been forabout a month, as the government works to end protests at fieldsand ports that have cut shipments for months, the National OilCorp. (NOC) said.

Striking workers, militias and political protests hadslashed the OPEC member's oil output to as low as 200,000 bpd,but Libya managed to resume production from some fields in thewest in mid-September after reaching a deal with someprotesters.

NOC board member Mustafa Sanalla said output was at 600,000bpd with armed protesters were controlling eastern ports andhalting shipments from there as part of broader unrest.

But foreign companies like France's Total and Spain's Repsolare continuing with development plans in the vast North Africancountry despite the turmoil.

"The government is still resolving the problem to reachnormal production of 1.6 million bpd by the end of the year. Wehave the technical capacity; it is a problem of security,"Sanalla told Reuters on the sidelines of a North Africa oilconference in Tunisia.

Two years after a revolution ended Muammar Gaddafi's rule,Libya's fragile central government and nascent armed forces arestruggling to contain rival tribal militias and Islamistmilitants who control parts of the country.

That instability was driven home earlier this month whenarmed militiamen briefly kidnapped Prime Minister Ali Zeidan forseveral hours before releasing him unharmed.

Libya's turmoil has added to the jitters of foreign oilcompanies already skittish about the political and investmentoutlook in North Africa.

Nearly three years after the Arab Spring revolts began,countries in the region are still struggling with messypolitical transitions.

In January, an attack by Islamist militants on the Amenasgas plant in Algeria, where nearly 40 contractors were killed,also showed the security risks from al-Qaeda-linked militants inNorth Africa.

At least seven companies, most of them based in the UnitedStates, have left projects or sold stakes in Libya, Algeria andEgypt in the past 18 months. But while analysts say North Africamay be less attractive for U.S. majors, the region's proximitystill makes it appealing to European oil explorers.

OIL LAW

Libya and Algeria are among Africa's top four oil producers,and alongside Egypt, are major suppliers of gas to Europe.

Sanalla said the government should finish drafting a new oillaw as an incentive to foreign oil companies by the end of thisyear or early next year. The government said last year it wouldseek to improve terms for foreign companies.

With that law approved, Libya would hold another biddinground by the first half of next year, he said.

Despite security worries, firms in Libya have drilled 40development wells and 11 exploration wells this year, he said.

Libya has reserves of over 40 billion barrels, but analystshave warned that some of the toughest terms in the business, inaddition to the security concerns, could deter investors.

Exxon Mobil said in September it would cut back itsstaff and operations in Libya due to growing instability. Thatcompares to the position of European majors with a strongpresence in North Africa.

Total, which operates in Libya through the Mabroukjoint venture with the state NOC, still has no production at itsMabrouk field because of the ports shutdown. But its offshoreal-Jurf field is producing around 40,000 bpd, said Jean-DanielBlasco, the company's director for North Africa.

Blasco said the French operator is also on track fordrilling two more Libyan offshore fields.

"We should start by the end of the year," he said.

Austria's OMV said on Monday it had struck oil in the Murzuq basin, 800 km south of Tripoli.

Libyan Norwegian Fertiliser Co (Lifeco), co-owned byNorway's Yara International, said it had increasedammonia and urea output at its operations in Brega in the east.

Lifeco has been producing below capacity due to limitedstorage capacity and gas shortages. But output has increased inthe past few days due to better gas supplies, said ChiefTechnical Officer Awad Elsaber. Production of ammonia was around1,700 tonnes a day, while urea output was around 2,400 tonnes.

After protests in western Libya were resolved, Spanish oilcompany Repsol says its production in El Sharara oilfield in thearea is now fluctuating at around 330,000 to 350,000 bpd.

Repsol regional director for Europe, Asia and Africa,Ferdinando Rigardo told Reuters the company was pushing aheadwith development plans in Libya and Algeria.

"We had to see how exactly we managed that," he said of theprotests. "But we are totally involved with development ... Wehave to manage these unstable periods."

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