U.S. oil companies working to return to Libya - Houston Chronicle, July 10
By DAVID IVANOVICH
Houston Chronicle Washington Bureau
WASHINGTON -- The nation's oil companies are prodding the U.S.
government to allow them to return to crude-rich Libya after a 13-year
absence.
Occidental Petroleum Corp. of Los Angeles has asked the federal Office of
Foreign Assets Control for permission to send a technical team to Libya to
survey properties it was forced to abandon there in 1986.
A second request by another, unspecified oil company also is pending.
The oil companies aren't likely to receive a fast response. "I would not expect
any immediate action," noted one government official.
But by pushing the issue now, they are hoping to capitalize on a potentially
pivotal moment in U.S.-Libyan relations and avoid being trumped by their
competitors overseas.
In April, Libya -- long a pariah in the international community -- agreed to hand
over two suspects implicated in the 1988 bombing of Pan Am flight 103 over
Lockerbie, Scotland. Their trial, to be held in the Netherlands, is scheduled to
begin in February.
The United Nations Security Council responded to Libya's overture by
suspending economic sanctions, although at the United States' insistence, that
body declined Friday to lift those sanctions permanently.
On Wednesday, Britain resumed diplomatic relations with Libya after Tripoli
agreed to help investigate the 1984 fatal shooting of a London police officer
outside the Libyan Embassy.
And although U.S. sanctions in Libya remain in place, "clearly the environment
has changed," said one State Department official.
The American oil companies are hoping to reclaim assets and producing fields
abandoned when then-President Reagan -- responding to alleged Libyan
involvement in terrorist attacks in Rome and Vienna -- ordered all U.S.
companies out of the country.
A consortium led by Houston-based Conoco, for instance, was forced to leave
fields producing 400,000 barrels of crude a day. After Conoco and partners
Marathon Oil Co. and Amerada Hess pulled out, Libya's state-owned oil
company -- the fourth partner in the group -- assumed complete control.
For Conoco, the 13-year hiatus has meant the loss of 300 million barrels of oil
and $5 billion worth of sales.
"Obviously, we're hopeful that once all the issues are resolved, we will be able
to once again return and continue our operations," a Conoco spokeswoman said.
Houston-based Marathon is "still very interested in getting back to Libya," said
Joe Pyner, Marathon director of public affairs.
Both Conoco and Marathon declined to say whether they have filed petitions to
send delegations to Libya. Occidental officials declined to comment on their
petition.
As they seek to return to Libya, U.S. oil companies face a formidable political
foe in the families of the 270 passengers and crew killed in the Pan Am
bombing.
Many of the family members oppose any move to lift U.S. sanctions on Tripoli
until the trial is over and all appeals are exhausted.
"They need to cooperate by providing witnesses, documentation, whatever is
called for," said Rosemary Wolfe, whose stepdaughter, Miriam Wolfe, a
20-year-old student from Syracuse University, was killed in the bombing.
Wolfe sees the oil companies' efforts to travel to Libya as just one more step
toward normalizing relations with Libyan leader Moammar Gadhafi.
"It boils down to a political decision," said Raad Alkadiri, a nation analyst for the
Washington-based Petroleum Finance Co. "It's going to be a tough issue for the
State Department to resolve and the administration to deal with."
The Libyans, meanwhile, are courting foreign oil companies in an effort to
jump-start an economy battered by both the economic sanctions and -- until
recently -- very low world oil prices.
Libya, whose oil production in the first quarter averaged 1.36 million barrels a
day, boasts 12 huge oil fields with reserves topping 1 billion barrels. But the
North African nation's economy grew by only 0.6 percent in 1997 and declined
by 1.5 percent last year, with early estimates of a further 1.5 percent decline
this year, according to the U.S. Energy Information Administration.
Between 1992 and 1998, the Libyan government says, sanctions cost the
country more than $24 billion. Libya's oil sector has been the hardest hit, losing
$5 billion in that period.
During their long absence, U.S. oil companies have kept in contact with their
former Libyan partners, industry sources said. But if the U.S. sanctions are not
eased soon, American oil companies will have to sit back and watch as their
foreign competitors land lucrative contracts.
Italy, Libya's former colonial ruler, signed a cooperative agreement with Tripoli
last year. And Italy's Agip oil company, the largest foreign oil producer in Libya,
has been extremely aggressive about winning new contracts there, industry
sources said.
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