Libya’s biggest oil port may open in August, rebels say

Libya’s largest oil-export terminal, the port of Es Sider, may re-open in August after the North African nation’s new parliament takes office, said a spokesman of the rebel group that shut the facility almost a year ago.

“It’s possible to solve all issues and get to an agreement to re-open Es Sider and Ras Lanuf when the new parliament starts working, God willing, after Ramadan,” Ali Al-Hassy, a spokesman of the Executive Office for Barqa, said by phone from eastern Libya.

Ras Lanuf is the second of two ports still under control of the Barqa rebels. The Muslim fasting month of Ramadan started today, June 29, in Libya and will finish with the Eid El Fitr holiday at the end of July.

The rebels’ Executive Office for Barqa seeks self-rule for the region known also as Cyrenaica. It occupied oil ports in eastern Libya at the end of last July, demanding an oil-revenue sharing agreement to make up for the neglect the area experienced under Muammar Qaddafi’s 42-year rule.

Libya, with Africa’s largest oil reserves, is now producing about 300,000 bpd, or a fifth of its output before Qaddafi was overthrown in 2011. The loss of the country’s oil production has boosted the price of Brent, a benchmark for half the world’s traded crude.

Deal

Under an agreement reached on April 6, the Barqa federalists handed over control of Zueitina and Hariga, two of the four oil ports they seized a year ago. In return, they received an amnesty and the payment of salaries for defectors from Libya’s Petroleum Facilities Guard who joined the rebels.

The accord calls for a second round of talks aiming at a comprehensive deal that would allow the re-opening of the two remaining ports, Es Sider and Ras Lanuf.

The Barqa federalists last month threatened to cancel the April agreement in protest over the appointment as prime minister of Ahmed Maiteg, whom they see as allied with the nation’s Islamists. His appointment was later withdrawn, and elections were held last week for a new parliament.

Danske Bank on June 19 raised its third-quarter forecast for Brent crude to $107 a barrel, from $104, on the turmoil in Iraq and the protests at oil sites in Libya. “We expect the oil price to stay in the $108-114 a barrel range over coming months, as it will take some definitive progress in Iran and Libya for the oil price to break below this range,” it said.

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UN says oil search in Northern Somalia risks stoking tensions

Two semi-autonomous areas of northern Somalia have largely avoided the violence that’s plagued the rest of the Horn of African nation for decades. Now oil exploration may change that, according to the United Nations.

Territorial disputes between the governments of Somaliland and Puntland, a separatist campaign by a clan-based group and “discrepancies” in oil licensing throughout Somalia are all contributing to simmering tensions in the region, the United Nations Monitoring Group on Somalia and Eritrea said in a May 28 memorandum. Somaliland’s planned deployment of an oil-protection force in the region may also deepen the strains, it said.

“Urgent attention must be given to this issue to avoid commercial activity triggering conflict further down the road,” Jarat Chopra, the coordinator of the monitoring group, said in the report. The document was sent to Bloomberg by a United Nations official who asked not to be identified because it hasn’t been released publicly.

Somaliland and Puntland dispute a border that’s criss-crossed by oil concessions that have been awarded to companies including DNO International, Horn Petroleum and RAK Gas. Oil deposits in Somalia may amount to as much as 110 billion barrels, according to a report published last week by the Mogadishu-based Heritage Institute for Policy Studies. Saudi Arabia, the world’s biggest oil exporter, has 266 billion barrels of proven reserves, BP data shows.

Somaliland declared independence in 1991 following a coup in the Somali capital, Mogadishu, and drew boundaries along the lines of pre-colonial borders of the British and Italian occupied territories. Puntland, which declared itself an autonomous state in 1998, claims parts of Somaliland in the Sanaag and Sool regions. Khatumo, a clan-based political organization, also claims sovereignty over land that straddles the boundary, according to the UN monitoring group.

Chopra cites March clashes in Sanaag province following a visit by Somaliland’s President Ahmed Mohamed Silanyo and the deployment of forces in Sool by Somaliland and Puntland as examples of worsening relations.

“While there has not been major conflict to report, political and military tensions have nonetheless escalated in recent weeks,” he said.

Somaliland Energy Minister Hussein Abdi Dualeh didn’t immediately respond to emailed questions. In a comment on his Twitter account on June 7, Somaliland’s president urged the United Nation monitoring group to “stop meddling in the affairs of Somaliland.” The semi-autonomous region will “protect its economic assets,” he said.

Since presidential elections in January, Puntland President Abdiwelli Mohamed Ali Gaas has been lobbying Khatumo representatives and other clans to drop their independence movement in support of Puntland, aggravating tensions with Somaliland, the UN said. Khatumo has challenged the legitimacy of DNO’s license with Somaliland in the disputed Nugaal block.

DNO entered Somaliland in April 2013 with a block in the Nugaal valley and have a competing claim with Horn Petroleum, which was issued a license in the disputed area by Puntland’s government.

Horn Petroleum is working to resolve disputes over the Nugaal block with the Puntland, Somaliland and Somali governments, along with London-based Genel Energy Plc, DNO and others organizations like the UN, Alex Budden, V.P. of external relations for Africa Oil Corp., Horn’s parent company, said in a phone interview.

DNO’s press officer Henrik Schwabe didn’t respond to four phone calls and three emailed requests for comment.

The United Nation is also concerned about the Somaliland government’s plan to hire Assaye Risk, a UK-based private security contractor, to train and equip a special force to protect oil exploration workers at a cost of as much as $25 million.

“The deployment of the oil-protection unit could play into internal and regional conflicts that appear to be brewing within Somaliland and between Somaliland and other regional authorities,” Chopra said.

Deeq Yusuf, chief of staff in the Puntland presidency, said his government sees the oil-protection unit as “part of the continued aggression and clan expansion of Somaliland against the territory and people of Puntland.”

Assaye Risk director Arabella Wickham said the 420-member oil protection unit would provide security services to international oil companies allowing the country to pursue one seismic operation.

“Within the blueprint, Assaye Risk clearly defined the operational remit of the OPU as defensive and pre-emptive only with a mandate confined to protective services in support of the energy industry,” Wickham said. The “government owned and commercially operated” unit would be recognized by the UN and constituted by Somaliland law, she said.

Puntland already has a similar force known as the Explorations Security Unit that provides protection for Africa Oil workers, according to the Heritage Institute.

Genel, which is exploring blocks in Somaliland, suspended seismic operations in September because of what it said was a “deteriorating security situation.” The company welcomes Somaliland’s plan to boost security, spokesman Andrew Benbow said in an emailed response to questions.

“Discussions continue with the government in order to facilitate a resumption of activity,” he said.

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ConocoPhillips partner FAR starts effort to sell Kenya stake

FAR Ltd., exploring off Senegal with ConocoPhillips and Cairn Energy Plc, is looking for a partner in Kenya as drilling picks up in the region.

FAR started a process in London last week and Australia this week giving companies access to its data, Managing Director Cath Norman said today, June 13, in a phone interview from Melbourne. The explorer may reduce its stake in one block in Kenya to as little as 25% from 60% and complete a deal by the end of the third quarter at the earliest, she said.

“There’s a fair bit of interest offshore Kenya at the moment,” she said. “In Kenya, the prize is oil.”

Drilling

The Australian company is moving ahead with plans in Kenya, Senegal and Guinea Bissau as explorers including Woodside Petroleum Ltd. look at Africa. The industry is watching the Senegal drilling closely after disappointing exploration results in Africa in recent months, Norman said.

“Most of the junior end of the market has not actually come up with the goods,” she said. “With a little bit of success we’d have more interest flooding back into the sector.”

FAR rose 5.4% today to 3.9 cents in Sydney trading, valuing the company at A$105 million ($99 million).

In Senegal, FAR expects drilling to resume in about two weeks after a delay caused by rig maintenance and to complete the well in about a month, according to Norman.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.