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Libyan gas exports to Italy unaffected so far by oil blockade

Highlights

Supplies steady at some 13 million cu m/d

Libya provides for some 8% of Italian demand

Blockade by LNA of key oil infrastructure

London — Gas exports in recent days have been steady at around 13 million cu m/d, according to data from S&P Global Platts Analytics.

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Nominations for Tuesday remain at 13 million cu m, the data shows.

In 2019, Libyan gas exports to Italy -- its only gas export destination -- averaged 15 million cu m/d and totaled 5.4 Bcm, according to the data, representing around 8% of Italy's total gas consumption.

"Gas flows from Libya to Italy have been regular over the last few days," a spokesman for Italian gas grid operator Snam said.

Libya's crude production is on the verge of collapse, and could plummet to less than a tenth of the country's 1.2 million b/d production capacity if its key oil fields and export terminals remain shut.

The LNA, led by General Khalifa Haftar, has been trying to take over Tripoli from the UN-backed Libyan Government of National Accord since April.

Haftar's big ambition has been to gain access to the country's oil revenues, which currently go to the Central Bank of Libya in Tripoli, which is under the jurisdiction of the GNA.

State-owned NOC warned that oil production could be limited to just its offshore fields and the Wafa field in western Libya if the blockade persists.

Much of the gas that feeds the Mellitah gas terminal -- the starting point of the Greenstream pipeline -- comes from Wafa and the Bahr Essalam field, Libya's biggest offshore gas field.

Market reaction

European gas market participants said they were not overly concerned by the situation in Libya, with one Italian gas trader saying Tuesday significant disruption was unlikely.

"Supply did not see much disruption even during the civil war," the trader said, adding, though: "Anything is possible, of course."

An Italian gas analyst said that supplies from Libya could falter, however, if an agreement were not reached soon with Haftar.

"Gas flows from Libya need to be kept under control because they could drop," the analyst said, an event that would trigger a further widening of the premium of gas prices at the Italian PSV hub to their Dutch TTF equivalent.

However, the market in Italy would be able to handle any disruption given the large volumes of gas in storage, the analyst said.

Libyan production

Libyan gas production totaled 9.8 Bcm in 2018, according to the latest BP Statistical Review of World Energy.

That is down on its most recent high of 16 Bcm in 2010 before the overthrow of Moammar Qadhafi in 2011, which led to civil war in the country and disruption to the upstream sector.

Flows via the Green Stream pipeline have been hit on a small number of occasions since 2011 by militant activity near the Mellitah gas complex, but deliveries have been stable for some time.

Offshore production, meanwhile, has largely been immune to the political chaos and militant activity that has dogged the Libyan energy sector since 2011.

With gas exports last year at 5.4 Bcm, the remaining 4.4 Bcm was used mostly for power generation within Libya itself.

Libya's proved gas reserves are 1.4 Tcm, according to BP, the fourth-highest in Africa after Nigeria, Algeria and Egypt.