When the Bombs Get Closer To the Oil
Hopes that a Venezuela peace plan could save the global oil market were dashed when reports that Moammar Gaddafi loyalists for the second day in a row bombed Brega, a main Libyan oil port, emerged. Rebels successfully defended the city yesterday and the oil was still flowing, yet the proximity to a major Libyan oil instillation has the market risk moving substantially higher. The Libyan Opposition has been inventive using alternate routes to get the precious oil out yet conflicting reports about the totality of Libyan oil production is keeping the market less then comfortable. Now with Gadhafi turning Brega into theater of war, the market obviously cannot count on the reliability of that supply.
To understand the importance of Brega and Gadhafi's attempt to try and get it back, I would refer you to the “World Port Source.” According to the World Port Source, "Port Marsa El Brega lies on the shores of Libya's Gulf of Sirte. About 200 kilometers southwest of the Port of Benghazi, Port Marsa El Brega is at the most southerly point of the Mediterranean Sea. In 2003, about 12 thousand people lived in Port Marsa El Brega. Port Marsa El Brega's reason to exist is the oil refinery there, owned and run by a subsidiary of the state-owned National Oil Corporation, Sirte Oil Company. Run in partnership with Esso Oil during the 1960s and 1970s, the Sirte Oil Company has had control of the Port Marsa El Brega facilities since the early 1980s. Before World War II, the site of Port Marsa El Brega was simply a small fishing village. During the war, the village was completely destroyed. After the war, the area was a field for land mines until it was selected to be the terminal for the country's first oil pipeline running 169 kilometers from Zaltan to the south. The new town and Port Marsa El Brega were constructed in the early 1960s from prefabricated materials. The new Port Marsa El Brega consisted of breakwaters, a wharf, undersea pipelines, and floating berths for oil tankers. The town contained a power plant, paved streets, housing, and a generous planting of trees to hold back the desert. Oil was first shipped from Port Marsa El Brega in 1961, leading to the creation of a refinery and a natural gas liquefication plant. In 1977, a plant for processing ammonia opened. Today, Port Marsa El Brega is becoming Libya's most important petrochemical center. It contains a technical training school, and it is connected to the Ports of Tripoli and Benghazi and Cairo, Egypt, by coastal highway."
With bombs and fighting near these facilities, the possibility for a disaster remains high. If a petro chemical plant or a refinery gets hit, it could spread further devastation and give a jolt to the global oil market again.