Morocco in spotlight amid Libya oil disruptions
Oil companies operating in the once-mighty Libya are reviewing their commitments more than two years after the revolution there. Further west, however, sits Morocco, where some oil companies are eagerly laying the groundwork for what could be a major oil and gas bonanza.
Libyan efforts to get its oil sector back to pre-war levels were stymied last weekend when protests disrupted operations in the west of the country. Work was halted at the El Sharara oilfield, which interrupted activity at the western port of Zawiya. That complicates an already fragile situation lingering in the east of the country. Meanwhile, U.S. supermajor Marathon tried, unsuccessfully, to pull out of the country amid the ongoing turmoil. Further west, however, sits Morocco, where Marathon's rivals are eagerly laying the groundwork for what could be a major oil and gas bonanza.Skip to next paragraph
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Companies operating in the once-mighty Libya are reviewing their commitments more than two years after former leader Moammar Gadhafi died after falling into rebel hands. Two short weeks ago, the bulls were running through the streets of Tripoli on word oil production in the war-torn country was on the rebound. Last week, however, the government moved to thwart Marathon's efforts to leave a country still wandering aimlessly through the post civil-war era. Mid-October enthusiasm ensued when oil production moved close to 700,000 barrels per day, though that was roughly half of its pre-civil war level.
Libya has struggled to deal with protesters demanding the centers of oil power move east to Benghazi, home of the revolution that ultimately brought an end to the Gadhafi era. That struggle started a new epoch where oil may be seen as one of Libya's key weaknesses. Now, demonstrations in the west of the country have halted production at oil fields and export terminals, pushing exports down to 250,000 bpd. The "institutional vacuum" in Libya prompted economists from the World Bank and the European Bank for Reconstruction and Development to warn the region was in serious economic trouble. (Related article: Clashes Along Oil-Rich Kenyan-Uganda Border)
Enter Morocco: Cairn Energy is the latest company to sweep deeper into the country, announcing Monday it farmed into frontier exploration acreage in a deal with regional explorer Kosmos Energy and the Moroccan National Oil Co. Cairn said it would help finance surveys offshore, where it plans to start drilling by the middle of next year. The company added it started drilling an exploration well offshore in a play where it already serves as the operator. Meanwhile, Gulfsands Petroleum, once a standout in the Syrian market, announced it started drilling into its concessions in Morocco. Gulfsands' CEO Mahdi Sajjad said the company plans to announce its results as early as November.
Morocco is considered frontier territory. Exploration activity offshore, however, is bustling along at twice the pace as it was during the past decade. Onshore, the U.S. Energy Department's Energy Information Administration estimates Morocco may hold 20 trillion cubic feet in recoverable shale oil and natural gas reserves. Wary of political instability and terrorism further east, investors may be looking for a safe port in the West African nation, which was isolated from much of the Arab Spring. Nearby Ghana is already capitalizing on the success from its 600 million barrel Jubilee field. If Morocco can duplicate that victory, and keep its political house in order, it could take over where Libya once reigned.
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