Why some major global oil producers are affected by the crisis

Market Realist

Why resumed oil exports in Libya will benefit crude oil supply (Part 2 of 5)

(Continued from Part 1)

Global oil producers affected by the crisis

Before the recent hostilities started to affect production, Libya had been producing ~1.60 million barrels per day of light, sweet crude oil. Libya’s production capacity had increased over the previous decade, from 1.4 million barrels a day in 2000 to 1.65 million barrels a day in 2010. Libya also produced an estimated 140 thousand barrels per day of non-crude liquids, which included lease condensate and natural gas plant liquids.

Some foreign firms have joint venture partnerships in the exploration and drilling in the Libyan oil fields, but their scope in equity participation is limited. In this section, we’ll discuss the major joint ventures by the international oil drillers who have interests in Libyan oil production, and their project plans.

Waha oil company

The Waha consortium consists of American firms ConocoPhillips (COP), Marathon Oil (or MRO), and Hess Corporation (or HES), in partnership with the state-owned National Oil Corporation (or NOC). Waha’s total production capacity is more than 350 thousand barrels per day. Production in the company was significantly affected by a labor strike and infrastructural damage, particularly to its export terminal at Es Sider. Current projects in the Waha pipeline include North Gialo and NC-98, which are each expected to come online over the next decade.

Repsol and Akakus oil operations

Repsol, a Spanish company, operates in Libya through Akakus Oil Operations. NOC has 50% ownership in the consortium. Production capacity from Akakus fields is estimated to total 300 thousand barrels per day. The consortium’s assets also include the downstream business of the Zawiyah refinery and an export terminal near Tripoli.

Occidental, OMV, and Zueitina

The Zueitina consortium is a partnership between NOC, Occidental Petroleum (or OXY), and Austria’s OMV. Production capacity is ~60 thousand barrels per day, but current output is much less due to pipeline issues and a lack of gas for reinjection.

Total and Mabruk oil operations

Mabruk oil operations is a joint venture between the French firm Total and the NOC. The assets include the offshore oil field of Al Jurf, which has a capacity of 45 thousand barrels per day. Statoil (or STO) has a stake in Total’s Mabruk field in the Sirte basin. Total production capacity of the joint venture is ~70 thousand barrels per day.

Suncor and Sirte oil operations

In the Sirte oil basin of Libya, the NOC has a joint venture with Canada’s Suncor Energy Inc. (SU). Total production is estimated to be ~100 thousand barrels per day.

An improvement in the political situation in Libya would lead to higher production and export of crude oil from Libya to the rest of the world. Higher supply of oil can help reduce oil price, which would negatively affect oil producers like ExxonMobil Corporation (XOM), ConocoPhillips (COP), and EOG Resources Inc. (EOG). It’s important to note that most of these companies are components of energy exchange-traded funds (or ETFs) such as the Vanguard Energy ETF (VDE). However, this would be positive for oil producers who have active participation in oil production in Libya like Occidental Resources (or OXY), Statoil ASA (or STO), ConocoPhillips (COP), and Marathon Oil Corporation (MRO). Some of these are components of the Energy Select Sector SPDR (XLE).

Continue to Part 3

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