BP (BP) Libyan Contract Still in Place Says Company

A spokesman for oil giant BP (NYSE:BP) said as far as the company knows, their contract with Libya's NOC remains in place.

He said, "At the moment we just have to wait and see. We're monitoring the situation. We have a contract with NOC and as far as we know it is still in place."

Shokri Ghanem, chairman of NOC, said last week the Libyan government would honor existing contracts with Western oil companies. He said, "We have our contracts with them. We will honor our commitments and I'm sure that they will honor their commitments."

After pressure from Western governments though, Gaddafi has said he'll replace those energy companies with those from China, India and Russia.

Even in a best case scenario, the production of the highly-desired light, sweet oils will take months to return to prior levels, suggesting gas prices could remain high for months, if not longer.

BP closed Thursday at $44.68, gaining $1.43, or 3.31 percent.

Gaddafi Orders Security Service to Sabotage Oil Facilities

There's been virtually no reliable information coming out of Tripoli, but a source close to the Gaddafi regime I did manage to get hold of told me the already terrible situation in Libya will get much worse. Among other things, Gaddafi has ordered security services to start sabotaging oil facilities. They will start by blowing up several oil pipelines, cutting off flow to Mediterranean ports. The sabotage, according to the insider, is meant to serve as a message to Libya's rebellious tribes: It's either me or chaos.

Two weeks ago this same man had told me the uprisings in Tunisia and Egypt would never touch Libya. Gaddafi, he said, had a tight lock on all of the major tribes, the same ones that have kept him in power for the past 41 years. The man of course turned out to be wrong, and everything he now has to say about Gaddafi's intentions needs to be taken in that context.

The source went on and told me that Gaddafi's desperation has a lot to with the fact that he now can only count on the loyalty of his tribe, the Qadhadhfa. And as for the army, as of Monday he only has the loyalty of approximately 5,000 troops. They are his elite forces, the officers all handpicked. Among them is the unit commanded by his second youngest son Khamis, the 32nd Brigade. (The total strength of the regular Libyan army is 45,000.)




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