Royal Dutch Shell Plc and Transocean Ltd. were among companies shutting offices or evacuating workers from Egypt as the effects of protests against President Hosni Mubarak rippled through the oil industry.
Brent futures traded in London, the benchmark price for two-thirds of the world’s oil, surged above $100 a barrel today for the first time in 28 months on concern anti-government demonstrations would close the Suez Canal and adjacent Sumed pipeline, which together can haul more than 4 million barrels of oil a day.
For Egypt, home to Africa’s sixth-biggest oil reserves, crude and natural gas are the biggest source of export income, accounting for about 12 percent of gross domestic product. Refiners in the U.S., the world’s biggest gasoline market, would have difficulty replacing Persian Gulf oil shipments, said Louis Gagliardi, managing director of energy at Hedgeye Risk Management in New Haven, Connecticut.
“The Persian Gulf sends 1.7 million barrels a day to the U.S., and if that ever got interrupted, it would be hard to replace,” Gagliardi said today in a telephone interview. “Go around the world and there’s no way to make up those barrels.”
BP Plc, the largest foreign investor in Egypt, made plans to evacuate the families of expatriate workers as Schlumberger Ltd. and Diamond Offshore Drilling Inc. began relocating staff.
Cairo Closings
Transocean, owner of the world’s biggest offshore drilling fleet, and Apache Corp. closed their Cairo offices. Apache, a Houston-based company that derived about a third of its 2009 production revenue from Egypt, has lost as much as $5.58 billion in market value since the close of regular trading on Jan. 21.
“The operations remain online and we continue to monitor the situation,” said Patrick Cassidy, a company spokesman. The company operates in a remote area of the western desert, he said.
BG Group Plc and Statoil ASA said they halted drilling in Egypt.
“Due to the uncertainty tied to the current situation and how long it will last, we’ve chosen to reduce activity offshore to a minimum,” said Baard Glad Pedersen, a spokesman for Statoil, Norway’s largest oil company.
Offshore crew changes aboard Transocean drilling rigs have been suspended because helicopter service from the shore has been halted, Guy Cantwell, a spokesman for the Vernier, Switzerland-based company, said in a telephone interview.
Five Rigs
Transocean has five rigs operating in Egyptian waters, including the Discoverer Americas, which is under lease to Statoil for $486,000 a day. Transocean has five vessels idle in Egyptian shipyards undergoing repairs or waiting for new customers.
Egypt pumped 742,000 barrels of crude a day and 62.7 billion cubic meters of gas in 2009, according to BP data. By comparison, Saudi Arabia, the world’s largest crude exporter, produced 8.4 million barrels of oil a day in January, according to Bloomberg estimates.
“The real concern from an oil and gas perspective is the risk of political unrest extending to other parts of North Africa,” Bank of America Merrill Lynch said in a report.
Opposition leaders have rallied around Mohamed ElBaradei, the former head of the United Nations’ nuclear watchdog agency, as protesters defied a curfew and stepped up demonstrations against Mubarak.
Eni SpA, Italy’s biggest oil company, is repatriating 250 workers and their families from Cairo, Ansa news agency reported, without saying where it got the information.
Shell said in a statement that a number of its senior and key personnel remain in Egypt.
“We are in touch with all our staff in Egypt, who have been advised to stay at home,” the company said. BG Group, OAO Novatek and OAO Lukoil also began pulling staff out of the country.
