CALGARY — An end to Moammar Gadhafi’s decades-long rule in Libya appeared close-at-hand on Monday, but a major Canadian oil company that suspended its operations in the country six months ago isn’t ready to return just yet.
Suncor Energy Inc. (TSX:SU) removed its employees from the North African nation when conflict broke out in February, and its chief executive officer has said they wouldn’t return as long as Gadhafi remained in charge.
Now, the days of Gadhafi’s reign seem numbered, after rebels advanced on the capital of Tripoli on Sunday. But Suncor spokeswoman Kelli Stevens said it’s still too early to know what the effect will be.
“We are continuing to monitor how that situation unfolds,” she said.
“The most important piece for us, right now, is probably that this latest set of developments might mean peace is nearer for the Libyan people.”
Suncor took a $514-million writedown on its Libyan assets during the second-quarter. Those operations make up a tiny fraction of the company’s overall earnings and production.
Suncor’s operations in another conflict-ridden country, Syria, have continued throughout a bloody crackdown on anti-government protests. The company acquired assets in both countries through its 2009 merger with Petro-Canada.
Brent crude, which is used to price many international oil varieties, dropped 92 cents to $107.70 per barrel in London on hopes supply constraints from Libya may soon ease.
Benchmark West Texas Intermediate crude for October delivery — the key North American benchmark — briefly fell, then rose 51 cents to $82.92 per barrel in New York as traders used a financial strategy to take profits.
Libyan crude represented less than two per cent of global demand before the conflict, but it was a key supplier to much of Europe. Brent crude prices have been high for months, as output from Libya has all but disappeared.
The market reaction Monday isn’t pinned on any concrete effect the Libyan developments are having on world oil supplies, said Bob Schulz, business professor at the University of Calgary.
“Just because it appears that Gadhafi’s going down, doesn’t mean that there’s going to be stability in Libya, nor in Syria, nor in any place else in the Middle East,” he said.
“It may take a while — a while meaning years — for stability to be re-established. It may mean that the oil prices may go up and down depending upon news releases rather than on demand and supply.”