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INTERVIEW-Libya steps up fuel imports as strikes hobble refinery

Source: Reuters - Thu, 19 Dec 2013 08:37 PM
Author: Reuters
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(Adds fresh refinery comment in paragraph 16-17, repeats to add Update tag)

By Ulf Laessing

ZAWIYA, Libya, Dec 19 (Reuters) - Libya is stepping up fuel imports, with four tankers queuing at one port, as the OPEC producer's second-largest refinery runs at only half-capacity due to oilfield strikes, a senior official said on Thursday.

A mix of militias, tribesmen and civil servants demanding political rights or a greater share of Libya's oil wealth have occupied several oilfields and ports, cutting exports to 110,000 barrels per day (bpd) from over 1 million bpd in July.

The government has struggled to keep the 120,000-bpd refinery in Zawiya <C}RO7309414559> operating since protesters in October closed the El Sharara oilfield that feeds it. Since then, Zawiya has run off existing stocks and supplies from the easterly Brega port, which officials have closed for exports for that reason.

Zawiya is key to supply the capital Tripoli, some 40 km (25 miles) to the east, and western Libya with petroleum products. The country's biggest refinery in Ras Lanuf <C}RO7309414116> has been shut by strikers along with its adjacent export port since summer.

The government is trying to maintain supplies of motor fuel to ease social tensions as it struggles to assert control of the North African country, still at risk from militias who kept their weapons after helping to topple Muammar Gaddafi in 2011.

The Zawiya refinery is running at about half of its capacity due to crude shortages, operations manager Mohammed Hassan al-Haj said.

"We have two units with a capacity of 60,000 bpd each. The second is currently shut due to a lack of supplies," he said during a visit to the refinery and its port on Wednesday. "The other train (unit) is at full refining capacity of 60,000 bpd."

Engineers in the refinery's control room put production slightly lower, at around 50,000 bpd, saying the unit still in operation was running at 80 percent of capacity.

MORE TANKERS COMING

Still, Haj said the refinery's daily production of 1.26 million litres of petrol - half of its usual output - was enough to meet domestic demand, thanks to rising imports.

Analysts say the government has no choice but to increase fuel imports, though this is exacerbating budget problems as a result of the loss of oil revenues - Libya's economic lifeline.

"There is no lack of supplies due to imports," Haj said, blaming recent long queues at petrol stations in Tripoli on logistical problems and chaos as angry motorists tried to refill. Frightened owners closed petrol stations for days.

The fuel situation in the capital has improved in the past few days since soldiers were deployed to protect petrol stations and organise queues.

The Zawiya refinery is awaiting some 110,000 tonnes of oil products coming from abroad this week. Four tankers could be seen waiting at the port.

One tanker had just discharged 25,000 tonnes of gasoline while a second was unloading 29,907 tonnes of gasoil, Haj said. Another tanker carrying 30,000 tonnes of gasoil and a fourth with 25,000 tonnes of gasoline were waiting to unload.

The refinery had also received two crude cargoes from Brega and was expecting another tanker, bringing total crude shipments from there to almost 1.8 million barrels, he said.

Engineers in the control room said the refinery had about two weeks' worth of crude stocks, adding that this posed no problem as new domestic supplies were coming, along with fresh oil product imports.

"There will be no fuel shortages at all because we are getting crude supplies from Brega," said Mustafa Owen, a member of the refinery's management committee. "The refinery is working normally and will continue to work normally."

Haj also said the shutdown of one refinery unit had halved output of liquefied petroleum gas for domestic consumption to around 360 cubic metres a day.

Prime Minister Ali Zeidan had hoped to persuade an eastern autonomy group to reopen three ports that previously accounted for exports of 600,000 bpd. But the group's leader, Ibrahim Jathran, said his militia would keep the ports shut because Tripoli had not agreed to share oil revenues. (Editing by Dale Hudson and Kevin Liffey)

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