STOCK MARKET WATCH -- Monday, 16 September 2013

[Demeter]

69. Why gunmen have turned off Libya's oil taps By Rana Jawad / BBC News

http://www.bbc.co.uk/news/world-africa-24051371

Armed groups in Libya are currently blocking key oilfields and ports - hijacking the government of its main source of revenue and leading to some fuel shortages and blackouts. Billions of dollars have been lost over the last few months as oil production has plummeted, costing about $130m (£82m) a day. Earlier this year, Libya was producing at least 1.5 million barrels of oil per day; last week a little more than 100,000 were pumped a day - a figure which officials say has gone up to 263,000 this week.

Leading the blockade are armed groups made up of current and former employees of border security and units of the Petroleum Facilities Guard - set up to secure the oilfields. Their main complaint is about industry corruption which they say has not improved since long-time leader Muammar Gaddafi was toppled from power in 2011, but there is no one single issue or demand.

Most of the nine ports are closed, including two of the largest oil export terminals at Es Sider and Ras Lanuf. Oil is mainly being exported from two offshore platforms - Bouri and Al Jurf. Some gunmen are demanding more autonomy for the east of the country, where most of Libya's oil is found. There are others who say it is a strike over salaries, and some members of former militias paid by the government in the aftermath of the uprising to guard oil facilities - and since replaced by trained personnel - are angered at being "fired". The government has dismissed their complaints and has said it is a treasonable offence - and accuses the militias of trying to sell off the oil independently.

Deputy Oil Minister Omar al-Shakmak admitted the situation was a worry for foreign oil companies which operate the oilfields.

"The security issue is essential and we know a situation like this is not encouraging for investment, but I assure them it's temporary, not permanent," he told BBC Africa. A lot of it is to do with day-to-day expectations not being met” It is not clear how the government intends to settle the issue, despite Prime Minister Ali Zaidan's recent warning that it might consider a "more serious role". Last week, parliament agreed to a 20% salary increase for civil servants, which would cover those in border and oil security. But this has been long in the pipeline and has done little to ease the blockade. For now officials are appealing to locals around the oilfields to put pressure on the "protesters".

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