DOHA (Zawya Dow Jones), Dec. 6, 2011
U.S. oil giant ConocoPhillips has restarted operations in Libya and hopes to restore its pre-war production level of 350,000 barrels a day of oil in over a year, the firm's top executive said Tuesday.
Jim Mulva told Zawya Dow Jones in an interview in Qatar's capital that it could take "several years" before the company reaches its target of 700,000 barrels a day of crude oil in the North African state.
"We think we can get back to 350,000 (barrels a day) and then go back to our initial plans and hopefully restore it by as much as even double," Mulva said.
Conoco partners in Libya with fellow U.S. firms Hess and Marathon Oil in a joint venture called Waha Oil Co., which is the largest oil producer in Libya involving foreign partners. Libya's National Oil Corp. is the largest shareholder in the firm.
Before Libya's civil conflict, which ended with the death of Gadhafi in October, Waha Oil produced more than 350,000 barrels of crude oil a day--over 20% of the country's production. The shutdown of most Libyan oil operations--including Waha--in February led a spike in crude prices to levels not seen since 2008.
Mulva said current oil price levels supported Conoco's investments in the industry but warned that prices could fall due to the fragility of the global economy. He warned there was more short-term pain to come due to Europe's sovereign debt crisis, as leaders grapple with some "tough decisions" over the coming months.
"Europe and the rest of the world need to sort out the financial crisis because it certainly has an impact on economy, investment and recovery," Mulva said. "Prices could potentially go down as result of weakness in the world economy."
Conoco's total capital expenditure is set to reach $15.5 billion in 2012 but Mulva said that could rise in 2013.
He added that a weaker U.S. dollar in 2011 had made foreign investment more expensive for Conoco because "a lot of our investments are denominated in other currencies and has led to increased capital costs to complete the projects."
Mulva said he would consider hedging against some capital expenditure costs on projects in 2012 due to fluctuations in local currency, a strategy that wasn't pursued in 2011. Conoco doesn't hedge against commodity prices, he said.
The Houston-based oil major is in ongoing talks with Qatar over developing a new petrochemical plant, similar in scope to its two Q-Chem projects in the industrial city of Mesaieed, south of the capital, Doha, that make ethylene and olefins, Mulva said.
"We are looking at maybe a Q-Chem III," he said, declining to give details about the project.
Copyright (c) 2011 Dow Jones & Company, Inc.
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