Glen­core seals Libyan oil deal to cover min­ing losses

Weekend Argus (Saturday Edition) - - LIFE -

LON­DON: Trad­ing house Glen­core has se­cured a deal to buy as much as half of the oil Libya is ex­port­ing as it looks to boost trad­ing to help offset flag­ging prof­its from min­ing.

For war-torn, cash-strapped Libya it of­fers steady sales to in­ter­na­tional buy­ers and shifts to Glen­core the risks as­so­ci­ated with load­ing oil and char­ter­ing ves­sels at ports where op­er­a­tions have be­come more un­pre­dictable due to the con­flict in the coun­try.

Un­der the ar­range­ment with Libya’s state-run Na­tional Oil Corp (NOC), which be­gan in Septem­ber, Glen­core loads and finds buy­ers for all the Sarir and Messla crude oil ex­ported from the Marsa el-Hariga port near the coun­try’s east­ern bor­der with Egypt.

While Libyan oil ex­ports peaked at 1.6 mil­lion bar­rels per day (bpd), bat­tles be­tween ri­val fac­tions seek­ing to con­trol the coun­try, as well as strikes and block­ades by lo­cal tribes, have kept pro­duc­tion un­der 0.5 mil­lion bpd for most of the past year.

Hariga, with ex­ports of up to 140 000 bpd, has be­come Libya’s largest ex­port­ing ter­mi­nal, as the two big­gest – Es Sider and Ras Lanuf – re­main closed.

Libya is still ex­port­ing oil from other lo­ca­tions, such as offshore plat­forms Bouri and Al-Jurf, with­out a Glen­core go­b­e­tween, and is work­ing to re­open its larger fields of El Feel and Sharara.

A slump in cop­per – usu­ally a ma­jor profit cen­tre for Glen­core – zinc and coal prices has badly hurt the com­pany, which has one of the high­est debt lev­els in the in­dus­try. Its shares have shed more than two-thirds of their value this year.

It has promised to cut debts by sell­ing as­sets and sus­pend­ing div­i­dends, and has also as­sured in­vestors its large trad­ing di­vi­sion would help it with­stand the com­modi­ties price slump and weak rev­enues from min­ing.

Glen­core hopes to gen­er­ate $ 2.5-$ 2.7 bil­lion ( R34.8bn to R37.6bn) in trad­ing rev­enues this year, although first-half rev­enues came in be­low ex­pec­ta­tions.

The Tripoli- based NOC and cen­tral bank are some of the only in­sti­tu­tions still func­tion­ing in Libya.

The NOC ear­lier this year de­nied re­ports of an ex­change of crude for oil prod­ucts with Glen­core, and said any ar­range­ment that did not route pay­ments via its cen­tral bank would be il­le­gal. – Reuters

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