BRUSSELS (Dow Jones Newswires), Feb. 28, 2011
Moammar Gadhafi's regime appears to have lost control of most of Libya's oil and gas fields to opposition forces, the European Union's energy commissioner said Monday, dismissing the idea of imposing a blockade.
"There is reason to believe that the majority of the oil and gas fields are no longer under Gadhafi's control," Gunther Oettinger said after a meeting of European energy ministers.
The installations are now controlled by local tribes or regional groups opposed to the Gadhafi government, he said. A blockade would "be punishing the wrong people," he said.
The EU earlier slapped an asset freeze and a travel ban on Gadhafi and 25 members of his family and inner circle, and banned the supply of weapons, ammunition and related material to Tripoli.
The 27-nation bloc finalized the measures after the U.N. Security Council agreed at the weekend to impose similar sanctions on the Gadhafi regime in a bid to stem the deadly repression of an opposition movement.
Libyan gas represents less than 3% of the entire EU market while oil accounts for less than 10%.
Oil production had ground to a halt in Libya in recent days but was apparent set "to get going again," Oettinger said.
The energy commissioner said the EU had enough reserves to make up for the shortfall in Libyan supplies and that the OPEC oil cartel as well as Russia were willing to help fill the gap.
Libya, a member of the Organization of the Petroleum Exporting Countries, is the fourth biggest oil producer in Africa.
It produces 1.69 million barrels of oil per day and exports 1.49 million barrels, with 85% of it going to Europe. Italy is its main client for oil and gas.
Oettinger said companies affected by the drop in Libya production would be compensated.
World oil prices have climbed amid a wave of revolts spreading across North African and the Middle East in the past month, from Tunisia and Egypt all the way to Bahrain, Yemen and Oman.
Saudi Arabia, OPEC's largest producer of oil, said it was ready to compensate for the supply losses from Libya.
While Libya's production does not weigh on world prices, any delivery problems in other parts of the Arab world could have an influence, Oettinger said.
"If other countries were to have delivery problems, then a peak could be reached in the coming days," he said.
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