With the fighting in Libya taking its toll on the Brent pricing index for crude petroleum and in turn on everyone’s wallet at the pumps, a bit of light is coming from Libya… the United States has decided that working with the rebels on oil exportation is ok… …so we have further taken sides in the Libyan mess. There are some serious concerns on who we’re working with when we say that we stand by the rebels in Libya but everyone from the U.S. to the UN to the E.U. feels that the best interests of the world are served by giving military might and financial support to the rebels.
This chart shows every energy and oil installation in Libya, offshore and on. Every one of them is a European-owned entity.
According to an article from Reuters on March 28th, the U.S. green lighted sales of Libyan oil from rebel held oil fields which bypasses the current oil embargo in place on any oil coming out of Libya. This plan also has the support of the UN and serves the European Union very well so they’re backing the idea, of course. Some highlights from the Reuters article…
“(Reuters) – The United States on Monday gave a green light to sales of Libyan crude oil from rebel-held territory, giving a potential boost to forces battling Muammar Gaddafi.A U.S. Treasury Department official said Libyan rebels would not be subject to U.S. sanctions if they avoid entities linked to Gaddafi’s regime, which would allow them to sell oil under their control.
“The rebels are not part of the government of Libya. They are not subject to the sanctions,” the official said.
But the rebels, who retook a number of oil fields and terminals in eastern Libya over the weekend and were advancing west toward Gaddafi’s hometown of Sirte, must first establish clear lines of control and payment systems that do not involve Libya’s National Oil Corp, its central bank nor any other government entity, the official said.
U.N. diplomats echoed these sentiments, helping further clarify the status of rebel-held oil, which could provide vital revenues to forces trying to topple Gaddafi.
“There is no U.N. embargo on Libyan oil,” a U.N. Security Council diplomat told Reuters on condition of anonymity. “The rebels can sell oil. But they can’t do it through the Libyan National Oil Corporation.”
A senior Libyan rebel official said on Monday that rebels were in “active discussions” to have sanctions lifted on sales of oil from east Libyan fields.
Ali Tarhouni, who is in charge of the rebels’ economic, financial and oil matters in Benghazi said the fields were capable of pumping 100,000 to 130,000 barrels per day of crude, and most of this would be exported because of low refining capacity in eastern Libya. Before the crisis began, Libya was producing about 1.6 million barrels per day.
“We hope they will be lifted for the liberated areas as quickly as possible,” Tarhouni said of the sanctions. “Not with everybody, but with some countries.”
There are some inherent risks in working the oil out of Libya while a war is going on, so don’t expect to feel a break at the pumps just yet. There are the issues of securing the fact that the purchase money stays only with the rebels and not being intercepted by Libya’s National Bank. Then there is the most difficult part… finding a shipping company that is willing to float a ship into a war zone to pick up the oil— talk about being a target for Libyan military forces! Another challenge: the crude has to be shipped out as there are no refineries in Libya available to process the crude either.
So far, apparently Qatar seems to be the odds on favorite for assisting the refinery of the oil. Qatar was the first to recognize a rebel party as having the rights to profit from Libyan oil production. I guess they had NO benefit whatsoever in siding with the rebels, right?
Anyways, did anyone catch the comment from Ali Tarhouni about hoping the sanctions would be lifted in order to work with some of the countries but not with everybody? Anybody else wondering who is on that list?