Oil Companies to Start Talks on Return to Libya
Date: 27-Feb-04
Country: USA
Author: Richard Valdmanis
The talks are the first step in the reentry of oil firms Marathon Oil Co., Amerada Hess, ConocoPhillips and Occidental Petroleum, which produced more than a million barrels per day there before U.S. sanctions forced them to withdraw in 1986.
The companies are expected to send officials to Tripoli by the end of the month to discuss their return, raising hopes among big energy consuming nations of a new source of additional oil in the tight global market in coming years.
"We will be in the process of negotiating our reentry into our existing holdings in Libya," said Jay Wilson, spokesman for Amerada Hess. "We can't implement a reentry, but we can begin the process of negotiating it," he added.
The United States yesterday lifted a travel ban on Libya and allowed Libya to set up a diplomatic presence in Washington to reward Tripoli for scrapping its nuclear arms programs.
The move, which was briefly delayed after Libya's prime minister denied Libya was responsible for the 1988 bombing of a Pan Am jetliner which crashed in Lockerbie, Scotland, allows U.S. companies with pre-sanctions holdings in Libya to negotiate their return.
Libya would be a welcome source of additional oil to a market tightened by stringent OPEC policy and rising global demand. Low supplies have boosted oil prices over $35 a barrel, raising concerns over the impact of high energy costs on economic growth.
U.S. oil companies had already been granted permission by the U.S. government on a case-by-case basis to negotiate lease renewals on some soon-to-expire Libyan holdings, as well as to conduct technical inspections of properties.
"The lifting of these restrictions means the opportunity to expand the scope of our discussions is greatly improved," said Paul Weeditz, spokesman for Marathon Oil Corp. "This move also allows us to start talks in conjunction with our lawyers, which we couldn't do before."
On Tuesday, Libyan Foreign Minister Mohamed Abderrhmane Chalgam said he was expecting a delegation of U.S. oil companies to arrive in Tripoli by the end of the month for discussions.
Marathon and Amerada Hess, which along with ConocoPhillips form the Oasis Group, confirmed a meeting would take place, but declined to offer further details
The bulk of the Oasis Group's oil concessions in Libya are set to expire in 2005 and the oil companies have asked the Libyan government to extend the permits, ensuring that the leases will not be transferred to European companies whose countries have no bans on investment.
The Oasis Group holds a 41 percent stake in Libya's mammoth Waha oil field, with the Libyan government controlling the rest. ConocoPhillips and Marathon share a 32.66 percent stake, while Amerada Hess holds permits for 8.33 percent.
A ConocoPhillips official said the company's "return to active participation in the Oasis group's Waha concession area remains dependent upon further authorization from the U.S. government."
Occidental Petroleum, which is not a member of the Oasis Group, also holds concessions in Libya that were gained in 1966. The company's oil output in Libya reached 170,000 bpd before it left in 1986.
