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Repsol Libya JV May Return To Prewar Output Next Month-Document

Sunday, Nov 06, 2011

By Benoit Faucon and Ilan Brat

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Output from Repsol YPF SA's (REP.MC) giant Libyan oil field may return to pre-war production levels as early as next month, according to a letter sent to contractors of its joint-venture, as the country's oil flows back to global markets faster than expected.

Some oil officials, however, maintain Repsol 's oil field could take many months to reach the 340,000 barrels a day it produced before the conflict.

"We expect to reach our January production figures around early December 2011," Abdulmajid Shah, chairman of Repsol 's Libyan joint-venture, Akakus Oil Operations, wrote in a letter to contractors dated Nov. 1, seen by Dow Jones Newswires.

Shah couldn't be reached for comment. But a person close to Akakus said it expects Sharara--the giant field in the Southern desert that is operated by the joint venture--to "reach over 300,000 barrels a day by [the] first week of December 2011." Akakus' shareholders also include OMV AG (OMV.VI) and Total SA (TOT).

However, other officials are taking a more cautious stance on Sharara, which is the largest of the Libyan oil fields to have a foreign partner.

Omar Shakmak, Libya's deputy oil minister, said "six weeks, it is not enough time" for Sharara to return to normal production. "Maybe at the end of the first quarter [of 2012], it will arrive at such production," he added.

A Repsol spokesman declined to comment on output-figure expectations.

The person close to Akakus said Sharara is already producing 112,000 barrels a day, used for local refining, less than two weeks after restarting output following the death of Moammar Gadhafi.

Akakus' Shah had said in early October that production at Sharara could take time because of safety concerns and repairs needed to basic facilities, such as housing.

But the letter to contractors suggests progress has been faster than he expected.

"Akakus is announcing the resumption of its normal operation of oil and gas production and has started all necessary repair activities to its residential camp and workshops," he wrote in the letter.

He said that progress of these works is very encouraging and that the security and safety of the sites is "very promising," calling on contractors to prepare for a return to the same level of presence they had "last January."

The person close to Akakus said workers had also accepted to make do with limited staff and basic levels of comfort to accelerate the ramp up.

Civil war in Libya shut down most production in February, but Gadhafi's toppling has enabled some of the country's crude oil to return to global markets. Within less than two months of resumption, output has returned to 560,000 barrels a day, more than a third of its pre-war level.

-By Benoit Faucon and Ilan Brat, Dow Jones Newswires; +44 77 601 777 36; benoit.faucon@dowjones.com

(END) Dow Jones Newswires

06-11-11 1738GMT