Libya seeks Italy's help with fire at oil facility

Libya's de facto oil minister said Sunday the country's crude production has fallen "drastically" and that he has reached out to Italian oil giant Eni SpA for help in extinguishing a blaze at an eastern oil facility snatched back from rebel fighters.

The call for help by National Oil Co. head Shukri Ghanem demonstrated the country's dependence on foreign oil companies' expertise and the crippling impact of an exodus of that labor force as a result of the fighting in the OPEC member.

"There's quite a big fire in one of our ... kerosene storage units (at Ras Lanouf), and we're trying to fight it," Ghanem told The Associated Press in a telephone interview. "We are asking for some help to try to put it down."

"I spoke with Eni's chairman to see if they can help us because it (the refinery) is on the Mediterranean and it affects the environment," he said, adding that he was told "they're deciding whether they can help."

Eni's offices in Milan and Rome were closed Sunday and company spokesmen weren't answering their cell phones.

Forces loyal to Libyan leader Moammar Gadhafi recaptured Ras Lanouf - a key refining and export complex - after fierce battles against the rebels. It is part of a concerted push to reclaim the eastern part of the country where at least four major export ports are located.

Libyan state television reported Sunday that pro-Gadhafi forces retook the oil town of Brega, farther east of Ras Lanouf.

Before the mass protests that have ripped through the Arab world took root in Libya and became an armed rebellion, Eni produced about 244,000 barrels of oil and gas equivalent per day in the North African nation. But Eni, like other foreign oil companies, quickly withdrew its foreign workers as the fighting escalated, with the rebels battling Gadhafi supporters and effectively capturing control of the country's oil-rich east.

Since then, production from virtually all of Libya's oil fields has either been halted or sharply cut, bringing overall output down to roughly a third of its usual 1.6 million barrels per day.

Ghanem, who said earlier this week that production was at about 500,000 barrels per day, reiterated that output "went down drastically" in the wake of the weeks of fighting.

"We are working to make sure the integrity of the oil industry is not affected" by the fighting, Ghanem said. He added that several fire trucks had been stolen while the rebels held the facility, and that made it difficult to battle the blaze.

Experts have voiced concern that the fighting in and around the oil terminals will damage the infrastructure, making it even harder to bring the oil sector fully back on line.

The country sits atop Africa's largest proven reserves of crude, and disruptions in its production, along with worries that the unrest will spread to other, larger OPEC members, have enflamed oil markets.

The U.S. crude futures benchmark contract had shot up as high as almost $107 per barrel on the New York Mercantile Exchange earlier in the week before dropping to $101 per barrel on expectations Japan's demand would fall sharply following the massive earthquake and tsunami that ravaged the country.

OPEC kingpin Saudi Arabia has boosted its output to compensate for the Libyan production shortfall, and ministers of the 12-nation bloc that supplies roughly 35 percent of the world's oil have said they had begun informal talks to determine whether an emergency meeting was needed in light of the Libyan export disruption.

It remains unclear exactly how much oil is being produced in Libya, or exported from the country.

At least three ports were closed as of earlier this week and international sanctions on the country have seriously sapped the appetite for its crude given the difficulties of payments.

Ghanem said the country was still honoring all oil contracts on the terms upon which they were signed. But he conceded that the oil accounts had been frozen because of the sanctions.

"There's no change in our contracts," he said.