Eni Declines as Libya Unrest Worsens, BP Stops Exploration

BP Suspends Exploration as Libya Unrest Worsens; Eni Drops
Eni, which produced 244,000 barrels of oil equivalent a day in Libya in 2009, said operations in the country were proceeding as usual. Photographer: Chris Warde-Jones/Bloomberg

Eni SpA, the largest foreign oil producer in Libya, fell the most in 19 months in Milan trading, and BP Plc suspended exploration because of worsening violence in the North African country.

Eni, which produced 244,000 barrels of oil equivalent a day in Libya in 2009, fell 5.1 percent, the most since July 2009. The company said in a statement that production is continuing as normal. BP has no producing assets in Libya and is evacuating families and non-essential staff, said David Nicholas, a spokesman for Europe’s second-largest oil company.

Libya holds the largest crude oil reserves in Africa and oil prices rose to a two-year high today. Saif al-Islam Qaddafi called on protesters against his father Muammar Qaddafi’s 41-year rule to engage in dialogue or face a civil war that risks the country’s oil wealth, warning that “rivers of blood will flow” if demonstrations continue.

“The violence is unsettling and it’s definitely right to be cautious,” said Jason Kenney, head of oil and gas research at ING Wholesale Banking in Edinburgh. “It seems like Eni is most at risk. The gas coming into Europe is quite significant, so it’s a concern.”

Shokri Ghanem, chairman of Libya’s National Oil Corp., said he had no information about a disruption in oil production. Al Jazeera reported earlier that Libya’s Nafoora oil field had stopped producing because of an employee strike.

Pipeline to Italy

Eni said that while “no problems at plants and operational activities have been reported,” family members of its employees are being relocated and repatriated. The company also operates the Greenstream gas pipeline from Libya to Italy through the Mediterranean Sea.

BP retreated 0.3 percent in London. BP will remain committed to doing business in Libya, Chief Executive Officer Bob Dudley said at a press conference today after announcing an agreement to buy stakes in licenses in India.

Austria’s largest oil company OMV AG is withdrawing all non-essential staff from Libya. The Vienna-based company produced 34,000 barrels a day in Libya in the first nine months of 2010, its third-biggest production country after Romania and Austria. OMV fell 4.2 percent to 32.57 euros in Vienna.

BASF SE’s Wintershall unit, which operates eight oil fields in the Libyan desert, is making preparations together with Libya’s National Oil Corp. to reduce its production in the country and allow its international employees and their families to repatriate, the company said in an e-mail response to questions today.

Oil Gains

Oil rose to a two-year high today, with Brent crude prices in London exceeding $105 a barrel. Price swings of the commodity have doubled this year as unrest spreads through the Middle East, source of one-third of global crude supply.

Libya has become the focal point of regional protests ignited by the ouster of Tunisia’s president last month and energized by the fall of Egypt’s President Hosni Mubarak on Feb. 11. Violence has flared in Yemen, Djibouti and Bahrain as governments cracked down on calls for reform.

Thousands of people demonstrated yesterday in Benghazi, Libya’s second-largest city. They were met by gunfire from forces loyal to the 68-year-old Qaddafi, Human Rights Watch said, citing reports from witnesses.

Statoil, Repsol

Statoil ASA, the Norwegian energy producer, closed its office in Tripoli, spokesman Baard Glad Pedersen said by phone. Statoil participates in land-based oil production and exploration activities in the Mabruk field, operated by Total SA, and in the Murzuk basin, operated by Repsol YPF SA.

Repsol, Spain’s biggest oil company, is operating normally in Libya and isn’t withdrawing staff, Kristian Rix, a Madrid-based spokesman, said. Repsol had net production in Libya of 34,777 barrels a day in 2009 and has been present in that North African country since the 1970s. Repsol dropped 2.6 percent in Madrid.

RWE AG, which is working on developing fields in two concessions in Libya, has suspended operations and recommended that international employees and relatives return home, Carolin Flemming, an RWE spokeswoman, said by e-mail. Some workers returned home on the weekend of Feb. 19, she said.

Royal Dutch Shell Plc said it temporarily evacuated the families of expat workers in Libya. “We continue to monitor the situation in the country very closely,” said Kirsten Smart, a Shell spokeswoman, by e-mail.

Officials from more than 90 nations including Saudi Arabian Oil Minister Ali al-Naimi and U.S. Deputy Energy Secretary Daniel Poneman gather in Riyadh tomorrow to seek ways of curbing oil-price fluctuations.

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