TPT May 2011

G lobal M arketplace

STRATFOR warned, “This is just the beginning.” Here, abbreviated and lightly edited, is the global intelligence company’s analysis of ENI’s unenviable position vis-à-vis Libyan strong man Muammar Gaddafi’s suddenly fractious domain: ENI’s relationship with Libya reflects Rome’s, which has had influence in what is currently Libya literally since the time of the Roman Empire. Of more pertinence to the present situation, ENI has had boots on the ground in the North African state since the dawn of its energy industry in 1959 and has never scaled back its operations. Even in the days of Libya’s ostracism from the West in the 1980s, ENI drilled on. Until the onset of the current political turmoil, ENI produced some 250,000 bpd of oil in Libya, which accounts for 15% of the Italian firm’s global output. It is also the major power behind Italy’s moderate piped natural gas exports. As a partially state-owned firm, ENI has been unable to secure new energy sources except on terms set by others. Italy has to find about 60 billion cubic metres (bcm) of natural gas a year to cover its natural gas deficit. Libya can provide about 11 bcm. ENI, fully supported by the central government in Rome, gets all of it, but needs 49 bcm more. Italy, via ENI, is also the single largest consumer of Libya’s oil, with most of the rest going elsewhere in Europe. Whether ENI loses access to Libyan energy because of safety concerns, supply interruptions, or a new government in Tripoli that looks less than favourably upon the company that stuck by Colonel Gaddafi through thick and thin, there is much risk and little opportunity ahead in ENI’s future relations with Libya. The costs of remediation vs the risks of doing nothing: deteriorated pipeline infrastructure forces a debate in the US According to the most recent government figures, in the United States there are over 2.3 million miles of pipeline carrying natural gas and hazardous liquids (chiefly petroleum and refined petroleum products, but also chemicals and hydrogen). Outdated technology and decades of neglect have been cited in a number of pipeline accidents across the country. The needed improvements to the nation’s pipelines could cost billions of dollars. For consideration: (1) the question of who should bear this expense; and (2) aspects of a disaster in San Bruno, California, last year, with its lesson in the dangers of delay. Security at a price As reported by Bay Citizen, a news organisation providing coverage in the San Francisco Bay Area to the New York Times , safety improvements debated during federal hearings into the gas pipeline explosion in San Bruno could come at a substantial cost to the 6.1 million business and household customers of Pacific Gas & Electric (PG&E). The explosion – on 9 September 2010 – killed eight people. The hearings, by the US National Transportation Safety Board, revealed that it was caused in part by failures in a matrix of pipes installed in the 1950s. From Washington, where the hearings were held 1-3 March, John Upton of Bay Citizen wrote that these initiatives were discussed: replacement of aging pipes; new leak detection systems and

Oil and gas

The Libyan Sahara near Gaberoun

In Libya since the beginnings of its energy industry, Italy’s ENI now has much to lose there When, on 13 March, Libya’s acting oil minister said that he had reached out to Italian energy major ENI for help in extinguishing a blaze at an oil facility, the SOS pointed up the extent of Libyan dependence on the expertise of foreign oil companies. It illustrated as well the paralysing effect of the withdrawal of that support as a result of the fighting in Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC). “There’s quite a big fire in one of our...kerosene storage units [at Ras Lanouf, in the east of the country], and we’re trying to fight it,” National Oil Co head Shukri Ghanem told the Associated Press in a telephone interview. “We are asking for some help to try to put it down.” Mr Ghanem said that he had appealed to ENI’s chairman on grounds that the refinery “is on the Mediterranean and it affects the environment.” The uncertainty was unmistakable when he told the AP, in Cairo, “They’re deciding whether they can help.” As noted by AP business writer Tarek El-Tablawy, ENI’s offices in Milan and Rome were closed on Sunday and company spokesmen were not answering their cell phones. (“Libya Seeks Italy’s Help with Fire at Oil Facility,” 13 March) Because Libya sits atop Africa’s largest proven reserves of crude, global oil markets were preoccupied with disruptions to its 1.8 million barrels per day (bpd) of oil output and with fears that the unrest would spread to other, larger OPEC members. But a case could be made that the ENI officials who did not return phone calls were struggling under a special weight of worry. › According to “Unrest and Libya’s Energy Industry,” published 22 February by Strategic Forecasting, Inc, by that date political strife in Libya had already begun to impact energy production; and,

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