Libyan oil tanker trade halted for now - sources

Published 03/30/2011, 10:13 AM
Updated 03/30/2011, 10:16 AM
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* Shipping market still nervous about Libya oil cargoes

* Commercial uncertainty over dealing with rebel shipments

By Jonathan Saul

LONDON, March 30 (Reuters) - Libyan oil shipments remain at a standstill, with no one attempting to hire tankers at the moment due to violence and the impact of sanctions, shipping sources said on Wednesday.

Oil shipments from Africa's third-largest producer have been blocked for weeks due to heavy fighting and western sanctions on the Libyan government. A NATO arms embargo at sea on leader Muammar Gaddafi has also meant further potential shipping disruptions.

"There has been no crude oil, no fuel oil and no clean products out of Libya for about 10 or 12 days," a shipping source said. "There is no Libya enquiry at the moment from anywhere."

Libyan rebels pulled out of the oil town of Ras Lanuf on Wednesday under heavy bombardment from Gaddafi's forces, showing their weakness without Western air strikes to tip the scales in their favour.

"Forget Libyan trade for a while, it's war there," another shipping source said.

Libya produced about 1.6 million barrels of oil per day before the crisis, or almost 2 percent of world output.

"A large number of shipping firms are avoiding comment on working in Libya, mainly because of reputation concerns," said John Drake, a senior risk consultant with security firm AKE.

Sources said the mounting uncertainty involved in potential Libya trades was also killing off activity.

Highlighting the growing risks, Libya's government warned on Wednesday it would sue any international company that concluded energy deals with the rebels.

"Firms and organisations are also likely going to be wary of doing business with one side or the other while the situation remains so fluid," AKE's Drake said.

"If you establish a partnership with one side, it will likely rule out the possibility of future trade with the other, so many will not want to commit when the frontline continues to shift and the final outcome remains uncertain."

REBEL EXPORTS

A senior Libyan rebel official has said Gulf oil producer Qatar, which this week became the first Arab country to recognise the rebels, had agreed to market oil produced from east Libyan fields that are no longer under Gaddafi's control.

Separately, the United States has said crude oil sales by Libyan rebels would not be subject to U.S. sanctions if they avoid Gaddafi-linked entities.

International sanctions are designed to cut off funding to Gaddafi, but shipping sources said there were still too many unknowns at the moment in trading with rebels, especially in relation to payment mechanisms.

"It's all very well the U.S. and Qatar making statements, but whether they are backed by something that is fundamentally commercial remains to be seen," said John Dalby, chief executive with maritime risk management specialists MRM.

"If they are not, there will be a lot of doubt and worry about getting involved."

(Editing by Jane Baird)

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