Kiran Stacey Oil companies win whatever happens in Mid East

Fighting in Ras Lanuf, LibyaA note has come through from Moody’s about oil companies operating in the Middle East, which makes some interesting points.

Its main thrust is that any disruption to supply from Libya, even for major players in the country, will be counteracted by a surge in oil prices.

One reason for that is that Libya taxed these companies at roughly 94 per cent. It has previously been said that one risk to IOCs is that if a new regime comes to power it will inflict more punitive terms on these companies as a populist measure. But realistically, it couldn’t get much more punitive than it already was, at least not without pushing out companies altogether and so stopping that source of revenue for the regime altogether.

One company to watch, however, is OMV. Last year, the company generated 10 per cent of its production from Libya. This is less than Eni (the biggest foreign oil producer in Libya), but OMV is in a vulnerable position because of its plans to refinance after buying Petrol Ofisi and Pioneer Tunisia. The report says:

A failure by OMV to complete this exercise in a timely manner could create downward pressure on its rating.

Another long term risk for all operators is that of sanctions, which could halt operations there altogether.

But as this fast moving story develops, here are the companies to keep an eye on:

Largest Rated Oil Companies Exposures to MENA (by production)

Libya North Africa Middle East Total MENA
Eni 14% 32% 2% 34%
BG 0% 30% 0% 30%
Occidental 2% 2% 28% 30%
Hess 6% 8% 19% 27%
Total 2% 5% 19% 24%
Apache 0% 24% 0% 24%
Anadarko 0% 15%* 0% 15%
OMV 10% 13% 2% 15%
Marathon 11% 11% 0% 11%
Nexen 0% 0% 11% 11%
Suncor 6% 6% 2% 8%
Repsol YPF 5% 6% 0% 6%

* Figure based on production revenues