U.S. Oil Firms Reach Deal With Libya

U.S. oil firms reach deal with Libya

http://rawstory.com/news/2005/U.S._o...with_1230.html

(Gold9472: Libya was smart. It was either this, or become a place like Iraq. It will be interesting to see if Libya becomes a place for U.S. military bases. Africa has A LOT of oil.)

12/31/2005

U.S. oil companies have reached a $1.83 billion with Libya's national oil company to resume oil production in the nation, the Wall Street Journal Reports.

The Journal characterizes this is a sign of warming relations between the two nations.

Excerpts from the registration-restricted article follow:

Yesterday's announcement means Conoco, Marathon and Amerada Hess are free to resume production in an area that produces about 350,000 barrels of oil per day and is believed to hold big additional stores of oil and natural gas. Under the deal, Conoco and Marathon each will hold about a 16% interest in the project, Amerada will hold an 8% interest, and Libyan National Oil Corp. will hold the remaining 59%.

No special permissions from the U.S. government were needed for yesterday's announced deal. Although the White House has lifted all sanctions on nonmilitary trade, Libya remains on the U.S. terrorism list. That means companies are either banned or restricted from selling military equipment and so-called dual-use items with potential military applications.

Under the agreement, the three companies' licenses will be extended for an additional 25 years. In addition to getting the majority of the oil, Libyan National Oil Corp. will get a payment from the three companies totaling $1.3 billion, and an additional payment of $530 million to cover costs that the Libyan company incurred since 1986 in keeping up the fields.

Libya has been moving toward improved relations with the West since the late 1990s. The rapprochement has been particularly rapid over the past two years. In summer 2003, Libya accepted blame for the 1988 bombing of Pan Am flight 103 and agreed to compensate relatives of the victims. That led the United Nations to lift its sanctions, but the U.S. demanded that Libya abandon its pursuit of weapons of mass destruction, a step Libya took in December 2003. Two months later, the White House announced it was giving U.S. companies that still held oil concessions in Libya permission to start negotiating their return to the country, subject to "further U.S. approval for implementation." Later in 2004, the U.S. formally lifted sanctions, clearing the way for a return by the U.S. companies.