Azerbaijani oil may replace Libyan one at European market
Azerbaijan, Baku, April 16/ Trend, A. Badalova /
European refiners may substitute Libyan light sweet by Azerbaijani and Kazakhstan crude that meets EU requirements, US Energy Security Analysis (ESAI) Andrew Reed said.
According to him, it is difficult for Europe to replace barrels of Libyan light sweet as there is a limited supply of alternative sources such as North Sea. European refineries use much Libyan oil to produce refined diesel fuel according to the EU requirements.
According to him, BTC Blend and CPC Blend supply to Mediterranean refineries will increase considerably.
"The North Sea Brent premium will remain high whereas the situation with diesel fuel supply in accordance with Euro-5 may complicate as a consequence", said Reed.
Asian refineries like India's Reliance can export more diesel to Europe and profit from the combination of strong diesel prices and big heavy sour crude discount, according to Reed.
Europe has been facing problems with Libyan oil import since the middle of February when mass demonstrations demanding for the ouster of Muammar Qaddafi, who has been ruling the country for more than 40 years, began. The disorders grew into the armed confrontation between government's forces and rebels.
Oil export from Libya is now complicated as the EU tightened sanctions against the Qaddafi regime earlier this week. At a meeting in Luxembourg on Tuesday, the EU 27 Foreign Ministers decided to add twenty six Libyan oil and gas companies, which the EU thinks finance the Muammar Qaddafi regime, to the sanction list.
Key importers of Libyan oil are Italy, Germany, Spain, France, China, and the US. Libyan oil import covers 51 percent of Italy's demand, 13 percent of Germany's demand, and 5 percent of France's demand. Austria, the UK, Greece, Switzerland and some other European countries import lesser oil from Libya.
According to the European Commission statistical data, diesel fuel price (tax included) in EU 27 member states averaged Euro 1,401 per 1,000 liters last week (April 4-11). Last week, the highest diesel fuel price, Euro 1,588 per 1,000 liters was observed in the UK, and the lowest, Euro 1,209 per 1,000 liters-in Luxembourg.