BP suspends exploration as Libya unrest worsens

By Brian Swint

Feb. 21 (Bloomberg) — BP Plc suspended exploration work in the Libyan desert as shares of Eni SpA dropped on concern that worsening violence in the North African country will disrupt oil and gas production.

BP, which has no producing assets in the country, is evacuating families and non-essential staff, spokesman David Nicholas said today. Eni, the largest foreign producer in Libya, fell as much as 4.1 percent, the most since May.

Saif al-Islam Qaddafi called on protesters against his father Muammar Qaddafi’s 41-year rule to engage in dialogue or face a civil war that risks the country’s oil wealth, warning that “rivers of blood will flow” if demonstrations continue. Libya holds the largest crude oil reserves in Africa. Brent crude oil rose to $104.60 a barrel, the highest since 2008.

“The violence is unsettling and it’s definitely right to be cautious,” said Jason Kenney, head of oil and gas research at ING Wholesale Banking in Edinburgh. “It seems like Eni is most at risk. The gas coming into Europe is quite significant, so it’s a concern.”

Shokri Ghanem, chairman of Libya’s National Oil Corp., said he had no information about a disruption in production of crude. Al Jazeera reported earlier that Libya’s Nafoora oil field had stopped producing because of an employee strike.

Pipeline to Italy

Eni, which produced 244,000 barrels of oil equivalent a day in Libya in 2009, said operations in the country were proceeding as usual. Shares were down 3.9 percent in Milan trading at 11:07 a.m. local time. The company also operates the Greenstream gas pipeline from Libya to Italy through the Mediterranean Sea.

OMV AG, Austria’s largest oil company, is withdrawing all non-essential staff from Libya. Shared dropped as much as 4 percent and traded down 2.7 percent as of 10:48 a.m. in Vienna. OMV produced 34,000 barrels a day in Libya in the first nine months of 2010, making this OMV’s third-biggest production country after Romania and Austria.

Libya has become the focal point of regional protests ignited by the ouster of Tunisia’s president last month and energized by the fall of Egypt’s President Hosni Mubarak on Feb. 11. Violence has flared in Yemen, Djibouti and Bahrain as governments cracked down on calls for reform.

Thousands of people demonstrated yesterday in Benghazi, Libya’s second-largest city. They were met by gunfire from forces loyal to the 68-year-old Qaddafi, Human Rights Watch said, citing reports from witnesses.

Tripoli Offices

Statoil ASA, the Norwegian energy producer, has closed its offices in Tripoli, Libya, spokesman Baard Glad Pedersen said by telephone today. Statoil participates in land-based oil production and exploration activities in the Mabruk field, operated by Total SA, and in the Murzuk basin, operated by Repsol YPF SA.

Repsol traded down 1.7 percent as of 10:51 a.m. in Madrid. BP was little changed in London.

Royal Dutch Shell Plc said it has temporarily evacuated the families of expat workers in Libya. “We continue to monitor the situation in the country very closely,” said Kirsten Smart, a spokeswoman for Shell, by e-mail.