Europe’s prospects
of receiving Libyan oil shipments would be weeks away, even if rebels
were quickly removed from the international sanctions list, as big
buyers say shipping and legal risks are still a concern.
A senior Libyan
rebel official said Gulf oil producer, Qatar, had agreed to market oil
produced from east Libyan fields that are no longer under the control of
Muammar Gaddafi. On Monday, Qatar became the first Arab country to
recognise Libya’s rebels.
Trading sources told
Reuters they didn’t think the latest developments changed anything
about the status of Libyan oil, whose shipments have been suspended for
weeks due to U.S., U.N. and EU sanctions and heavy fighting.
“I still cannot
touch this crude. I guess dozens of things need to happen – both
internally and externally – for me to start looking at it again,” said a
trader with an oil major.
Two Italian firms,
which have previously been among major buyers, also said they had not
yet been approached by rebels, although offers to sell crude were still
coming from Libya’s National Oil Co, controlled by the government.
“Even though Qatar
recognised rebels in Libya, this is not in line with the United Nations
resolutions. We all have to comply with U.N. sanctions,” a trader with
an Italian firm said.
The rebel official
in charge of the economy, Ali Tarhouni, said over the weekend he
expected the next shipment to take place in less than a week and that an
escrow account monitored by auditors had been set up.
Libya produced about 1.6 million barrels of oil per day before the crisis, or almost 2 per cent of world output.
Emboldened by the
Western-led air strikes against Gaddafi’s forces, the rebels have
quickly reversed earlier losses and regained control of all the main oil
terminals in the east of the OPEC member country.
Clear title
International
sanctions are designed to cut off funding to Gaddafi, and the U.S.
government has said the list of targeted companies could change should
they come under different ownership, while EU sanctions omitted rebel
oil firm, Agoco, from the list.
However, trading and shipping sources said a clarification of sanctions would not immediately reopen business.
“It goes beyond the
sanctions issue. It’s all about having clear title. You have to be 110
per cent sure you have legal title, and it will take months to sort it
out. You want to know who you are paying,” said an oil trader working
for a bank.
“We need to
understand who we are trading with, what sort of company is selling
crude, who controls it, who manages it. Can we sign ship-owners to the
area, and if we can, what sort of risk premium we are talking about,”
the trader with a major oil company said.
Ship brokers said there had been no indications of fresh cargoes being booked from Libya.
“It will be hard to find an owner willing to enter in to Libyan waters due to safety,” a shipping source said.
Shipping sources
have also said Western sanctions on Libya’s government have already hurt
shipping, with a virtual shutdown of its vital seaborne trade on the
cards.
John Drake, a senior
risk consultant at UK-based consultancy, Ake, said a major problem
would be to bring back specialist staff to get operations at fields and
ports restarted.
“Insurance may also
be more of a challenge. It’s also difficult at the moment to know what
kind of authorities you might be dealing with in the rebel areas,” Mr.
Drake said. Reuters
