Repsol halves Libya flow as gas prices hit record

Oil giant now producing 160,000 barrels per day compared with 360,000

Leading Spanish oil company Repsol YPF has reduced its production in Libya by half as a result of the conflict in the North African country, Chairman Antonio Brufau said Thursday. At a presentation of the company's 2010 earnings, Brufau said production "is not suspended," contradicting statements made by a Repsol spokesman on Tuesday.

He went on to say that Repsol is now producing 160,000 barrels per day, compared with 360,000 prior to the outbreak of unrest. Brufau said exploration staff are still working in Libya but will be repatriated "sooner rather than later," adding that Repsol might also put off some exploration work at Libyan drilling sites next year.

Gasoline prices were at record highs on Thursday, the pump price of a liter reaching 1.285 euros to equal the previous record set in January.

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The chairman said Repsol has assets worth some $650 million (472 million euros) in Libya, where it produces 14 million barrels of oil annually. Repsol accounts for about 20 percent of Libya's output of between 1.5 to 1.8 million barrels per day.

Asked about the economic impact of the unrest, Brufau said: "At the moment we're thinking in social and socio-political terms, not economic. We'll think in economic terms later. The priority is that there is peace in Libya and that our people are well."

Repsol said its net income last year tripled to 4.69 billion euros due to good operating results in all of its business areas and a capital increase by its Repsol Brazil division, which was fully subscribed to by Chinese oil company Sinopec. Recurrent operating income was up 66.7 percent at 5.213 billion euros.

The reserve replacement ratio at Repsol's upstream division was 131 percent, while its refining margins were among the best in the industry.

Sinopec acquired a 40-percent stake in Repsol Brazil at the end of last year for 5.430 billion euros in a deal that valued the division at some 13.5 billion euros. Repsol booked a capital gain of 2.86 billion euros from the deal. Repsol and the Chinese also agreed to jointly develop exploration and production projects off the coast of Brazil.

"We have passed strategic milestones and taken decisive steps to complete key projects set out in our Horizon 2014 [business] plan," Brufau said in a statement. "Our reserve replacement rate already exceeds 100 percent."

In response to speculation that Repsol could be an acquisition target for France's Total or Italy's ENI, Brufau told reporters that Repsol was planning to continue on its own.

"We have shown we have an independent project," he said. "Logically, a company that does its homework makes itself more attractive." Brufau said anyone wanting to make a bid for the company would have to offer a "minimum" of 40 billion euros.

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