Oil price jumps on Libya unrest

21 February 2011 Last updated at 13:38 As violence has spread across Libya, European oil companies have begun to evacuate expatriate staff The price of oil has risen in response to the turmoil in Libya.

Brent crude jumped 1.75% in early Monday trading to $104.25 a barrel, its highest level since before the 2008 financial crisis.

European energy companies are evacuating some staff from the country, which is a major oil and gas producer for the European market.

Meanwhile shares in Italian oil firm ENI - which is active in Libya - have fallen 4.4%.

Italian connection

The Italian company had said on Saturday that its operations were unaffected by the violence, which at that point had yet to spread to Tripoli.

Italy buys about one-third of Libya's oil and gas exports, making it the country's biggest customer by far.

ENI has been buying gas from Libya for decades, and is at the centre of a close political relationship between the two countries, according to one analyst.

Continue reading the main story In 2008-09, the Libyan government had considered buying an up-to-10% stake in ENI, although the investment did not go ahead.

Some 13% of the company's revenues come from Libya, and 30% from North Africa as a whole, meaning the firm is highly exposed to instability in the region.

Although market concern about the firm is focusing on the short-term impact of the unrest, the analyst said there were also fears that a change in regime could lead to the Libyan assets of ENI and other foreign investors being expropriated.

ENI was not yet commenting on the situation in Libya at the time of writing.

'Monitoring situation'

ENI is not the only foreign oil company affected by events in Libya.

Shares in Austria's OMV - another European firm that has been active in Libya for many years - had fallen about 4.3% by lunchtime on Monday.

OMV said it was withdrawing expatriate staff, though none of its operations are being affected.

Norway's Statoil has closed its Tripoli office and removed a handful of non-local employees, while Royal Dutch Shell has evacuated the family members of its foreign employees.

BP intends to evacuate some of its 140 employees from the country. Only 40 of its Libyan staff are expatriates.

A BP spokesman said that the UK firm was monitoring the situation and "making preparations to evacuate some of the families, and some non-essential staff in the next day or two."

The firm has already shut down its onshore drilling operations in Libya, although the work is only preparatory in nature, and not actually producing oil yet.

Separate offshore exploratory work in the Libyan Mediterranean is unaffected, the firm said.

Continue reading the main story The UK Foreign Office has advised that those without a pressing need to remain in the country, should leave by commercial means if it is safe to do so, and the US has also advised its citizens against non-essential travel.

Meanwhile Turkey says it has received applications from about 3,000 of its citizens to be flown home, with the first flight having been sent to Benghazi - the epicentre of the revolt - on Sunday.

Market anxiety

Commodities markets are worried about more than just Libya, with the threat of unrest escalating in Iran - the second biggest oil producer in the Organisation of Petroleum Exporting Countries (Opec).

There is nervousness that even Opec's biggest producer, Saudi Arabia, may yet succumb to instability, although the autocratic regime there has yet to witness any protests.

Oil supplies in Libya and elsewhere have yet to be significantly disrupted by any of the events in the Middle East.

However, the head of the Al-Suwayya tribe in eastern Libya is reported to have said they will attempt to stop oil exports to Europe if oppression of protesters by the Gaddafi regime continues.

Strikes by workers have already shut down the Nafoora oilfield, which is operated by a subsidiary of the Libyan state-owned oil company, and protests have also closed the Rus Lanuf oil refinery, according to local news sources.

Libya is responsible for only 2% of all oil production worldwide, although its share of the European market is estimated at 10%.

Oil production is essential to the Libyan economy, with oil output accounting for 95% of export receipts and 25% of the country's economic output.

A.nemdil & Press Agencies