Libya: PetroCan hopes to avoid U.S. wrath
'We don't foresee' U.S. investigation over Libyan deal
Financial Post, June 22
Peter Morton
WASHINGTON - Petro-Canada is hoping to fly below U.S. political radar in a US$75-million deal that would see it help develop oil and natural gas in Libya, one of several terrorist-supporting countries the U.S. has imposed sanctions.
The Calgary-based integrated oil company, which is still 18% owned by the federal government, said yesterday it was buying a 25% interest in the En Naga block in the Sirte basin in Libya from the Swedish oil company Lundin AB. The other 75% share is held by Libya's National Oil Co.
The U.S. Congress is poised to extend by five years its Iran-Libya Sanctions Act, which can impose penalties on foreign companies operating in either country that have investments worth more than US$20-million. George W. Bush, the U.S. President, also indicated he would be prepared to support an extension of the sanctions law when it expires in August.
But Petro-Canada is betting that its minor stake in the oilfield in Libya would be so small that it would not attract a U.S. State Department investigation.
"In the grand scheme of things, this is a relatively minor purchase," said Chris Dawson, a spokesman for Petro-Canada, adding the company talked with "appropriate government officials" before making the investment. "We don't foresee any investigation by the State Department."
The sanctions act allows the president to impose several types of penalties on foreign companies that have U.S. interests, including prohibiting loans from U.S. banks over US$10-million, denial of U.S. government contracts and even a ban on imports to the United States from a foreign company found violating the act.
Since the act was signed by Bill Clinton in 1996, the government has not imposed any sanctions. The State Department did launch an investigation in April, 1999, into an investment by Bow Valley Energy Ltd. of Calgary and its French partner, Elf Aquitaine SA. The two are part of a US$300-million offshore project in Iran.
But little came of the investigation and Bow Valley is still operating in the Balai field.
"The act has never been enforced," said Eric Thomas, a spokesman for USAEngage, a coalition of 670 U.S. companies pushing Congress to end the sanctions against Iran and Libya, especially now that Iranian government is seen as more moderate and the Libyian government has handed over suspects in the Pan-Am 103 bombing over Scotland in 1988.
"The State Department would like the act to go away," said Mr. Thomas.
The Iran-Libya sanctions are much milder, however, than those imposed by the Helms-Burton law on foreign companies operating in Cuba. Unlike Helms-Burton, the Iran-Libya law does not bar executives from companies hit with sanctions from entering the United States.
pmorton@nationalpost.com
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