Libya uncertainty plays part in BP profit decline

Adding to the host of challenges facing BP at the moment, the oil-giant faced a $600 million write-off in Libya this quarter, putting them on the way to a sharp decline in profits for the period. Libya has struggled to maintain stability in recent years amid political and security uncertainty, including a number of groups directly targeting the country’s energy sector, both foreign and local.

That uncertainty has made it difficult for those firms who’ve chosen to stay on in the country to ensure project stability. In the case of BP, the write-off was due to security issues in the country, whose energy sector provides the most viable path to economic growth and stability.

Desperate to rebuild the country’s most viable force for economic growth, the country’s energy sector has witnessed production rates plummet as militias and political advocacy groups continue to target oil and gas facilities. While this would prove distressing in any energy producing country, Libya’s economy looks to energy revenue for about 60 percent of its GDP. To be sure, BP’s Libyan write-off pales in comparison to the weight of lower global oil prices and a $10.8 billion charge associated with the 2010 oil spill in the Gulf of Mexico.

The company is expected to pursue cost-cutting measures after the company’s profits came in below Wall Street expectations. According to a Reuters report, these efforts have already included the cutting of 5,000 jobs at the end of 2014, while additional measures are expected to keep up with the sustained low in global oil prices.

http://www.forbes.com/sites/christophercoats/2015/07/30/libya-uncertainty-plays-part-in-bp-profit-decline/?ss=energy