Amid the rising security chaos of Libya, Texas-based oil company Marathon Oil’s rumored plans to pull out of the country have been suspended for reasons that remain unclear.
Marathon had earlier considered selling its 16.3% stake in Libya’s Waha Oil Company, which is one of the country’s most significant joint ventures with a production capacity--when security allows—of some 350,000 barrels per day.
Last year, Shell pulled out of Libya and last month Exxon Mobil announced it would follow suit. The Libyan authorities, under increasing duress due to continual demonstrations of impotence in the face of roving militias, were hoping to avoid a third withdrawal of a high-profile supermajor.
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Some are speculating that Marathon is choosing to stay because it would be offered below market value for its stake on Waha. Libya’s National Oil Company owns a 59.2% stake.
Libya’s oil industry has all but ground to a halt. Some $5 billion has been lost in revenues since roving militias and strikers have blocked export terminals. Crude exports have fallen to under 250,000 bpd, compared with a capacity of 1.25 million bpd. This is only half of what output was just a month ago.
The crisis began two years ago with the overthrow of Muammar Qaddafi, but in August things took a definitive turn for the worse, with armed groups seizing major oil export terminals and demanding autonomy for the eastern region.
Now the crisis has reached the west where other militant formations ominously charged with guarding the country’s pipelines and oil fields are seeking to profit on the momentum of the strikers and protesters in the east.
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Libya’s economy relies on oil for 95% of its export earnings, and right now it’s losing around $130 million day in revenues due to its inability to assert control over the situation.
Oil revenues provide about 75% of the government’s budget and in about six months this will run out, possibly leading to a complete breakdown in state institutions and public services.
By. Joao Peixe of Oilprice.com