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Libyan army restores order at gas complex, flows suspended

Source: Thomson Reuters Foundation - Mon, 4 Mar 2013 18:20 GMT
Author: Reuters
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* Gas flows to Italy halted after clashes at Mellitah

* Venture between Libya-ENI also curbs oil output

* 3-4 days needed to assess security, prepare for restart (Adds Eni saying some gas production restarted)

By Giancarlo Navach and Marie-Louise Gumuchian

MILAN/TRIPOLI, March 4 (Reuters) - Libya said on Monday the army had restored order at an energy complex near Tripoli after weekend clashes between militia guards, but that gas exports to Italy would remain suspended and oil production cut back for several days.

Libyan officials said the national army and militias aligned with it had arrived at the Mellitah oil and gas complex, some 100 km (60 miles) west of Tripoli, on Sunday night. The locally deployed militias had ceased fighting but gas exports had been suspended on Monday for a third day.

"We have full control, it is safe, it is just a matter of assessing the situation to identify the one entity that will take charge of the security," said Abdulfattah Shagan, chairman of the Mellitah oil and gas venture between Libya's National Oil Corporation and Italy's Eni.

"I think the army will be in charge," he said adding that the fighting has done only minor damage to facilities.

Armed clashes erupted on Saturday after an argument between former rebel fighters from nearby Zuwara and others from Zintan over who should guard Mellitah, security officials said. Deputy Oil Minister Omar Shakmak said one person was killed and several injured.

The disruption at the Mellitah complex is the latest to hit the energy sector in Libya, where protests have shut down oil-export terminals in recent months, and comes after January's hostage-taking at an Algerian gas plant.

Thousands of former rebels who fought to overthrow former leader Muammar Gaddafi in 2011 have been employed in a protection force to look after Libyan oil and gas installations. Rivalries between militia and clan groups have posed a broader problem for Tripoli as it struggles to assert central control.

In recent months, activists and local militia have disrupted operations in Libya's main industry, pursuing goals such as better living conditions or more regional autonomy.

This has hurt OPEC member Libya's oil output, which had returned to pre-war levels of 1.6 million barrels per day (bpd) relatively fast after the 2011 revolution, but has been hit by disruptions since then.

RESTART DUE IN DAYS

Mellitah supplies Italy with gas through the Greenstream pipeline, which ends at the Sicilian port town of Gela and at full capacity pumps at least 8 billion cubic metres a year.

Shagan told Reuters that in addition to a full suspension of gas production at the Mellitah complex, the venture had to reduce oil output at its Elephant and Wafa fields by 25 percent.

That could rise to 50 percent from regular output of 210,000 barrels per day, he added.

"Once we establish full security, then we will start bringing back our staff and preparing to start up. It will take three to four days altogether," he added.

A spokesman for ENI said the plant had restarted on Monday to process small gas flows. A source close to the matter said it would take several days to ramp up processing.

Italy gets most of its gas from Algeria, Russia, and Libya - which provides between 10 and 15 percent - while some comes from Norway and the Netherlands.

Italy will compensate for the Libyan gas stoppage by raising imports from the Russian and Dutch pipelines, analysts said.

The halt in Libyan supply coincided with large scale gas supply falls due to unexpected pipeline outages in the North Sea, which at one point on Monday propelled British spot gas prices to five-year highs.

Unlike Britain, where most of the gas sold is on the spot market, Italy gets most of its gas through long-term contracts linked to the oil price.

Italy saw its gas imports from Libya suspended for several months during the 2011 civil war that ultimately led to the fall of former leader Muammar Gaddafi. (Reporting by Marie-Louise Gumuchian, Ali Shuaib, Stephen Jewkes and Giancarlo Navach; Editing by Anthony Barker and Robin Pomeroy)

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