Libya Value And Growth Opportunities From Oil and Gas Normalization
Commodities / Crude Oil Mar 01, 2011 - 05:55 AM GMTBy: Andrew_McKillop
OVERVIEW
In the 10 – 15 days from today's date the following is likely and possible: -
Announcement of plans to recover and relaunch Libyan oil and refined products export
Quick recovery of export capacity of natural gas as well as crude and refined products
New democratic Libyan state and constitution plans announced with approx. 6-month horizon
For Muammar Khadafi options may be shrunk to: suicide (assisted or not); flight to a small number of potential shielding countries eg. Chad, Zimbabwe; capture and trial; public execution. Creating a credible post-Khadafi Libya is the high ground target and objective, with minimum civil society stress.
VALUE AND GROWTH OPPORTUNITIES
Current Nymex and ICE, WTI and Brent grade price levels may decline 10% or more through the 10-15 day horizon. European traded natgas price declines may be impressive. Price levels for crude may attain USD 86 – 88/bbl for WTI and USD 99 – 100/bbl for Brent, offering major opportunities for structured trading, with relatively close-linked crack spread opportunities
OTHER TRADES
Precious metals group PMG and USD/EUR: Credible recovery plans for post-Khadafi oil and products exports including urea and petrochems will surely downward impact gold and other PMG price levels, and US dollar/Euro value. PMG will decline and EUR will gain, in the absence of any other major upside factor such as intensified mass protest in the rest of Arab world.
Equity indexes: General indexes such as Dax, FTSE, DJIA, Nikkei, Cac-40 may show initial strong growth for 5 trading days or more following announcement of credible recovery plan for Libyan oil and gas exports, in the absence of any other downside factor, including continued Arab world protest.
Specially favored general equity indexes will feature the Italian Mibtel (MIB) index, with above average recovery profiles for UK FTSE and German Dax.
Food commodities: Strong price rebound is forecast for most major soft commodities, in the absence of any other downside factor, including continued mass protest in the rest of the Arab world which can quickly reverse early gains for major food commodities from Libya normalization announcement.
By Andrew McKillop
Project Director, GSO Consulting Associates
Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights
Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.
Contact: xtran9@gmail.com
© 2011 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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