Libyan oil industry

According Kevin Morrison in London, writing for the December 29, 2003, edition of the Financial Times, "Libya's pledge to dismantle its programme to develop weapons of mass destruction (WMD) could pave the way for the return of US oil companies that left the North African country in 1986 when then President Ronald Reagan imposed sanctions on the country."

Next year, the United States is "expected to lift the Libyan portion of the Iran-Libya Sanctions Act." However, Morrison says, this may not occur until after U.S. presidential election, 2004. "The United Nations lifted sanctions against the regime of Muammer Gadaffi in September."

According to J.J. Traynor, "an oil analyst at Deutsche Bank,... talks between Libya and US oil companies could start early in the new year. ... Libya has oil reserves of 40,000m barrels, about one-eighth of the oil reserves of Saudi Arabia, the largest producer in the world. ... Traynor said the companies most likely to seek a return to Libya are ConocoPhillips, Marathon Oil and Amerada Hess, partners in the Oasis Group in Libya.

"Oasis, one of the first foreign-owned companies in the oil rich country when it was opened up for oil exploration in 1955, produced about 400,000 barrels of oil a day from fields with more than 1bn barrels of oil reserves before it quit Libya.

"He said Occidental Petroleum, a US oil company, would also be interested in returning to Libya. Occidental entered Libya in 1966 and was producing 70,000 barrels a day from a 250m-barrel field before it left. ... Traynor said Exxon Mobil may even return to Libya."

"European oil companies have remained active in Libya during the absence of their US peers. They include ENI of Italy, Total of France and Repsol of Spain."

"'If they are serious about LNG [liquefied natural gas], we could see Royal Dutch/Shell Group appear on the scene,' Mr Traynor said. He added that Libya had seen its neighbours Egypt and Algeria develop their LNG capacity in a market forecast to grow substantially over the next 20 years. United Nations inspectors gave Libya high marks on Monday for working with them as they began checking if it had really renounced its nuclear ambitions, agencies report from Tripoli."

On 24 December 2003, New York Times' Simon Romero reported that "the possibility that the United States may soon end its economic sanctions against Libya could be a boon for several American oil companies that once had extensive operations there, several energy executives said on Monday.

"ConocoPhillips and Marathon Oil, both based here; Amerada Hess of New York; and Occidental Petroleum of Los Angeles operated in Libya for years before the United States imposed sanctions on the country in 1986. They all have contemplated a return to Libya for some time.

"Libya's foreign minister, Mohammed Abdelrahman Chalgam, stoked oil companies' hopes of a return to Libya when he told reporters in Algiers on Monday that Libya hoped to attract oil investment by American companies. Mr. Chalgam said that American companies could help Libya eventually double its oil output. ... 'We currently produce 1.5 million barrels per day and we aim to increase the oil output to 3 million barrels per day in 2020,' said Mr. Chalgam.

"This month, the National Oil Company of Libya reached a $100 million agreement with a group formed by Woodside Petroleum of Australia, Repsol of Spain and Hellenic Petroleum of Greece to develop several oil fields. The deal was Libya's first since United Nations sanctions were lifted last September. Brazil's state-controlled oil company, Petrobras, said this month that it was in negotiations with Libya for an exploration venture."

"Libya remains an alluring point of ambition for American oil companies. It has proven oil reserves of about 29.75 billion barrels and its location in North Africa makes its transportation expenses to Europe less costly than from other places.

"And while Libya is not expected to rapidly increase its oil production, it might eventually become one of a number of countries, including Iraq and Russia, that could help reduce the dependence of the United States and Europe on oil from the world's largest producer, Saudi Arabia.

"Libya, for its part, has signaled that it is eager to strike new deals with international oil companies. The economy remains heavily dependent on the oil industry, with oil shipments accounting for nearly all its export revenue and about a quarter of its total economic output.

"Some authorities on Libya's energy industry cautioned against becoming too optimistic about prospects in the country, which remains a socialist-driven economy and a member of OPEC."

Related SourceWatch Resources

 * Organization of African Unity
 * Axis of evil
 * Pax Americana, Africa

Documents

 * The Iran-Libya Sanctions Act (ILSA), Order Code RS20871, Updated July 31, 2003. Summary: "The Iran-Libya Sanctions Act (ILSA, P.L. 104-172) was due to expire on August 5, 2001, 5 years after enactment. Debate on renewal of ILSA centered on the difficulties incurred in implementing it, reactions to ILSA on the part of U.S. allies, and changes in U.S. relations with Iran and Libya since enactment. On August 3, 2002, President Bush signed into law H.R. 1954, P.L. 107-24, the ILSA Extension Act of 2001, renewing ILSA for another 5 years. No firms have been sanctioned under ILSA. This report will be updated to reflect legislative developments. See also CRS IssueBrief IB93033, Iran: Current Developments and U.S. Policy, and CRS Issue Brief IB93109, Libya."

Articles & Commentary

 * 19 April 2001: "Cheney Panel Seeks Review Of Sanctions. Iraq, Iran and Libya Loom Large in Boosting Oil Supply" by Peter Behr and Alan Sipress, Washington Post.
 * May 2001: "Cheney & Halliburton: Go Where the Oil Is" by Kenny Bruno and Jim Valette, MultinationalMonitor: "During Dick Cheney's tenure, Halliburton Company created or continued partnerships with some of the world's most notorious governments -- in countries such as Azerbaijan, Indonesia, Iran, Iraq, Libya and Nigeria. ... In order to do business with dictators and despots, Halliburton has skirted U.S. sanctions and made considerable efforts to eliminate those sanctions. Halliburton's pattern of doing business with U.S. enemies and dictators started before Dick Cheney joined the company, and may well continue after his tenure as CEO."
 * 17 May 2001: "USA: Bush Calls for More Coal, Oil and Nukes" by Randall Mikkelsen, Reuters: "The natural gas, electric, nuclear and coal industries embraced the report. So did the oil interests, although the American Petroleum Institute said it was disappointed the White House task force did not specifically recommend easing investment and trade sanctions for U.S. oil firms to develop supplies in Iran and Libya."
 * 1 April 2003 (Cache File): "Libya and the U.S.: A Blossoming Friendship?" by Khaled Hanafi Ali: "Libyan oil: Keeping Libya out of the 'axis of evil' is a strategic prerequisite for the countries of Europe, which rely on 70 per cent of Libya's oil. Libya has oil reserves of nearly 30 billion barrels, which equal the reserves of the North Sea, in addition to more than 1.3 trillion cubic metres of natural gas. ... US companies aim to benefit from investment in Libya, especially as countries usually witness an economic upsurge following the end of sanctions. Libya seeks foreign investment in order to develop its oil, natural gas, tourism and communications sectors. Libya has also declared that it will allow transit trade for the first time in new free trade zones to make use of its location as a bridge between Africa and Europe."
 * 18 June 2003: "'Rogue' No More - U.S. Eyes Oil in Libya, Sudan" by Franz Schurmann, Pacific News Service.
 * 20 July 2003: "Libya backs return of US oil business: Prime Minister Shukri Ghanem said," AFP: "'Many US companies used to enjoy advantages in huge oil fields and produced hundreds of thousands of barrels of oil per day,' he was quoted as saying. ... 'We have reached an agreement with these companies... to return to Libya,' he said, without elaborating."
 * 25 July 2003: "Liberia: Corpses at Our Doorstep" by Greg Palast: "In Liberia as in Iraq, we should be wary of the temptation to overstay our welcome. Liberia is close enough to Nigeria for the Bush administration to smell the oil. The French have moved troops into the nearby Ivory Coast, and Britain has reasserted authority over Sierra Leone. ... It is easy to imagine humanitarian intervention taking an ugly turn, with America again using Liberia as puppet, this time in a tussle over control of African resources. But the greatest difference between other nations where our troops have landed and Liberia is that in Liberia we are welcome."
 * 19 August 2003: "New opportunities in Libya" by Andreas Wild, petroleumworld.com.
 * 21 August 2003: "Businesses Press for US to Lift Libya Sanctions" by Edward Alden, New York Times.
 * 22 August 2003: "Libya's Lockerbie Deal Sets Potential Bonanza in Motion for Global Oil Companies" by Joe Duarte, FinancialSenseOnline (reprinted 23 December 2003).
 * 19 December 2003: "Qadhafi," edwardpig.com: "Ironically, it was the carrot of the return of the American oil industry to Libya, and not the stick of the American military, which ultimately led to this decision. Given this administration's allegiance to big oil, as well as the GOP's long-held view that capitalism is the answer to all of the world's ills, one would think that Bush would be playing this story as the true victory of capitalism that it is. But of course, since it suits his interests better to promote it as a consequence of the fact that 'We obtained an additional United Nations Security Council resolution requiring Saddam Hussein to prove that he had disarmed. And when that resolution was defied, we led a coalition to enforce it,' that's how he chooses to frame it."
 * 20 December 2003: "Too soon to decide on Libya sanctions-US official" by Bernard Woodall, Reuters: "Libya is moving "in the right direction" by promising to abandon weapons of mass destruction but it is too early to say when and if the United States will lift sanctions in a move that could benefit U.S. oil firms, a senior Bush administration official said on Friday."
 * 22 December 2003: "Libya Says Wants U.S. Oil Companies Back," Reuters.
 * 22 December 2003: "The Libya Bush Has Come to Respect " by Paul E. Stenbjorn, Republicons.org: "On December 19, 2003 Bush announced the fruits of nine months of clandestine negotiation with Libya strongman, Moammar Ghadafi, in which Libya would be welcomed to the world community in exchange for its renunciation of weapons of mass destruction. Most Libya observers have long realized that it poses a scant threat militarily but is a noxious den of human rights abuses and terrorist accommodation. Oh, and yes, it possesses massive amounts of oil and its Mediterranean Sea port is much more hospitable to US producers than those in the Persian Gulf."
 * 23 December 2003: "Houston Companies Push To Get Libya Sanctions Lifted. Bush Hints About Improving Economic Ties With Libya," thewpbfchannel.com: "Executives of Conoco-Phillips and Marathon Oil are already making plans to take advantage of a possible end to an embargo with Libya. ... The companies, along with New York City-based Amerada Hess, once produced about 850,000 barrels of oil a day in Libya."
 * 23 December 2003: "2 Houston oil firms soon may head back to Libya" by Jenalia Moreno, Houston Chronicle.
 * 23 December 2003: "Libya: From 'mad dog of the Middle East' to foreign oil/investment bonanza. Lucrative dance with West and world many years in making" by Larry Chin, Online Journal.
 * 23 December 2003: "ConocoPhillips, Marathon Oil Hope To Work In Libya," Morningstar.com: "The oil companies are eager to start doing business with Libya because concessions they hold with the country expire in 2005 and Libya could transfer the leases to Europe."
 * 24 December 2003: "U.S. Oil Companies Eye Libya Return" by Bruce Stanley, AP.
 * 25 December 2003: "Merry Christmas, Moammar" by George van Delaras, e-thepeople.org: "Gadhafi has been given the opportunity to market more oil and natural gas. ... As with most of the Bush administration's foreign policy actions, its real motivation is usually oil related. This time it is especially sweet...as in light, low-sulfur crude; the oil, in the deserts of Libya, has some of the highest valuation on the world market. The liquid natural gas (LNG) market is booming, too; and Libya has lots of that. ... One might wonder why this Libyan news is cropping up right now. ... Iraq is not particularly stable or pumping much oil, but the threat of Saddam destabilizing the region is gone. Now, that there seems to be more emphasis on cracking down on Saudi funding al Qaeda, terrorists threaten oil production. Problems.... like, oops, there goes an oil field up in smoke or pipeline set ablaze...make Bush supporters, like big oil interests, very anxious."
 * 27 December 2003: "Possible opening to West stirs hope in Libya. Gaddafi seeks to end hostilities with U.S. and revive economy" by Daniel Williams, Washington Post.
 * 25 February 2004: "US oil chiefs expected in Libya," BBC/UK: "The prospect of US oil firms making a quick return to Libya has risen after officials said company representatives are expected in Tripoli this month."