Occidental Petroleum Corp. said it does not support a pending US Senate proposal that calls on the company to pay the US government $1 million for future costs connected with improving security of a Colombian oil pipeline frequently subject to guerrilla attacks.
"There is no precedent for this in US history. Oxy did not request the appropriation of funds for protection of the pipeline. The Colombian government requested support from the US Embassy in Bogota after attacks in 2001 cost Colombia $500 million in lost revenue," an Oxy official said June 6.
The proposal is buried in S.2551, an emergency spending bill designed to combat terrorism aimed at US interests. It would provide $3.5 million in US aid to Colombia specifically for improving the security of the Cano Limon export pipeline. But the money would be contingent on written approval by Oxy and its partner, Repsol-YPF SA, to reimburse the US government for a portion of funds based on their ownership of the pipeline, according to Oxy officials.
The Colombian government owns 50% of the 483 mile pipeline that connects the Cano Limon area fields to an export terminal on the Caribbean Sea; Oxy holds 44%, and Respol-YPF the remaining 6%.
Bill details
A House version of the bill earmarks $6 million to the Colombian military for pipeline protection but does not require Oxy or Respol-YPF to pledge funds.
A spokesman for a sponsor of the provision, Sen. Patrick Leahy (D-Vt.), said the measure has "strong bipartisan support" and indicated the proposal aims to protect "taxpayers from having to pay security for a private oil company."
Oxy has a radically different view of the measure. It maintains the provision is a "back-door attempt" by Leahy, a long-time opponent of military aid to Colombia, to undermine President George W. Bush's initiative to aid Colombia's democratic government in its war against domestic terrorists.
Bill proponents said the White House has not signaled whether it supports or opposes the provision.
However, senior White House officials did warn lawmakers June 5 that the $31 billion supplemental bill, which includes the Colombian provision, needs to be trimmed by about $4 billion, or it may be vetoed if left in its present form.
Policy implications
Oxy is urging lawmakers to reject the pipeline provision, saying it has serious business and policy implications.
The company argues that it cannot agree to the reimbursement provision because, as a private party, it would have no control over the use of the money that would be allocated by the US government directly to the Colombia government as part of a military assistance plan. But even more troubling to the company is the possible threat the proposal poses to its employees, officials said.
"Worse still, our reimbursement would have the effect of casting Oxy in the role of a combatant in Colombia's internal conflict and paint a target on the backs of every one of our approximately 700 employees. Moreover, as a matter of policy, Occidental does not engage in providing lethal equipment and services to military or police organizations for the protection of its assets.
"From the standpoint of US policy, the implications are equally onerous. The reimbursement provisions give two private companies, one US and one Spanish, virtual veto power over a key foreign policy initiative by the Bush administration in the Western Hemisphere," the company official said.
Oxy added that the provision "appears to cast the US armed forces, who would conduct the training of selected Colombian military detachments, into the role of mercenaries that are for hire to private companies-including non-US multinationals.
"This is truly outlandish. These factors raise serious constitutional issues."