Oil and gas supplies

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Libyan Opposition began to supply oil to the USA- it could have far-reaching effects
Thursday, 09 June 2011 12:25
CNN reported, that the Libyan National Transitional Council signed the first contract to supply oil to the U.S.. On May 25, 2011 Tesoro Refining Corporation in the U.S. signed an agreement with Libya's National Council, to supply over 1.2 million barrels of Libyan oil to the U.S.. In accordance with this agreement, the oil tanker Equator due to arrive from Libya to the Hawaiian Islands.

After this is supposed to extend the supply of Libyan oil to the U.S. as the U.S. State Department has adopted a new resolution, calling for a new economic policy for Libya, as a result, support for the U.S. State Department deals with the Libyan National Transitional Council of Libya's oil sales to continue in the future.

It should be reminded, that in mid-February 2011, Libya began mass protests, making demands on care Muammar Gaddafi. Protests in further escalated into war between government forces and rebels, during which in the city of Benghazi, located on the eastern part of Libya, was formed a Libyan National Transitional Council, which was subsequently declared by the rebels the only legitimate authority in the country.

Before the war, Libya has provided 2% of global oil production, but in EU countries, Libya has provided no more than 7% of oil consumption. The main consumers of Libyan oil before the war were: Italy (28%), France (15%), Spain (10%) and Germany (9%). It is estimated, that Libya undersupplies caused world loses from 1.2 million to 1.5 million barrels of oil per day. In addition, almost completely halted gas supplies to Italy (gas from Libya to provide about 10% of the domestic market).

Despite the war, there were several reports, that representatives of the Libyan National Transitional Council sent oil tankers in some European countries, including Italy, as well as in China. Some analysts report, that in Italy, and China has already put up half a million barrels from the representatives of the Libyan National Transitional Council. Director of the largest in the north African oil refineries have repeatedly stated, that "work for an early resumption of exports of petroleum products in Italy is already underway."

Oil supplies from Libya on the old routes were almost completely paralyzed at the end of February 2011, when the banks refused to make payments for oil, due to the imposition of sanctions against Libya. And such European countries as Italy and France, bought a significant portion of oil in Libya.

EU countries since the beginning of the war in Libya began to actively seek a replacement of oil from Libya, is counting on Russia. Chairman of the Association of European Businesses Rainer Hartmann said earlier: "... in Europe hoping, that Russia can, if necessary, compensate for a deficiency of supply of oil and gas to EU countries."

In Russia help to Europe in trouble with the gas, and Gazprom increased gas supplies to Italy from 30 to 48 million cubic meters a day. Gazprom could fully compensate for the entire share of Libyan gas to Italy, but the Russian gas is too expensive, so the gas from Libya in the future may replace the cheaper gas from Nigeria.

But representatives of the Russian oil industry refused to increase oil supplies to Europe. As said by the representatives of oil companies in Russia- Russia has no resources to increase oil production. And increase the oil supplies to Europe can only reduce the oil supply to China, but at this time it is unacceptable.

It is noted, that between Russia and China since January 2011 was a dispute, arose relating to non-payment by the Chinese side of oil supplies from Russia to China, as a result, until the end of May 2011, there debt of Chinese company worth about $ 200 million (we had previously published a article on our website about this story), but after the representatives of Europe called on Russia to increase oil supplies to Europe, the Chinese company unexpectedly quickly extinguished all debts. It is therefore unlikely in the near future will increase oil supplies to Europe from Russia.

Since the oil-refining enterprise in Italy and France prefer high-quality Libyan oil to obtain petroleum products with a minimum cost of processing, the latest initiative of the American company Tesoro on the organization oil supplies in the U.S., can greatly complicate the work of oil-refining enterprises in Italy and France, which will seek other suppliers of oil.