By OGJ editors
WASHINGTON, DC, Apr. 22 -- US President George W. Bush appears poised to remove, possibly as soon as this month, certain unilateral sanctions against Libya so that US-based oil companies can make or expand investments there, government and industry sources said. Companies likely will be allowed to trade Libyan oil too.
Former President Ronald Reagan effectively shut down US oil business interests through a 1986 executive order. Now, 18 years later, Libya's recently rigorous efforts to renounce state-sponsored, especially in the post Sept. 11 geopolitical world, will likely give multinational companies the chance to make investments, although it could take several years given the country's dilapidated infrastructure, analysts said.
Other sanctions on the books, specifically the Iran Libya Sanctions Act, passed in 1996 and renewed in 2001, will require formal removal by the US Congress. But the existing legislation is not much of a stumbling block because it gives President Bush significant leeway to relax or waive sanctions if it is deemed to be in the national interest.
ILSA, which is scheduled to sunset in 2006, seeks to punish international oil companies that invest $20 million in either country. Sanctions never have been applied under the law.
Another potential complication for US companies could occur if Libya remains on the US State Department's terrorism list. If the White House chooses to keep that restriction some oil services companies would require special licenses from the US Treasury Department's Office of Foreign Asset Control (OFAC). Industry sources called that scenario "annoying" but not particularly damaging to potential investment opportunities. Additionally, US service companies might not be able to garner loan guarantees from the US Export-Import Bank.
As relations with Libya have improved, US companies with frozen assets, such as Occidental Petroleum Corp., Amerada Hess Corp., Marathon Oil Co., and Conoco Inc. (now ConocoPhillips) received permission by OFAC to travel to Libya to open offices or begin negotiations (OGJ Online, Apr. 19, 2004).
These companies have over the past several months enthusiastically endorsed the US' evolving pro-business stance regarding Tripoli, which became clearer after Libyan leader Moammar Gadhafi's agreed to accept responsibility for the 1988 Pan Am 103 bombing over Lockerbie, Scotland, and renounce terrorism.
Meanwhile US companies with no holdings in the country also are eager to cut deals.
"In the case of Libya, we are planning our resources to be able to respond rapidly in the event that US sanctions are lifted," a ChevronTexaco Corp. spokesman said.
"As a company with a substantial prior history in Libya, we are encouraged that the US government is engaged in direct discussions with the Libyans to resolve the issues that continue as impediments to the removal of US sanctions." ChevronTexaco stated that it looks "forward to the full opening of Libya for all international investors. We have been involved in discussions with Libyan officials to understand what opportunities might exist there."
