Several months after President Bush lifted sanctions on Libya, as a result of the North African country abandoning its nuclear weapons' program, the process of restoring full relations between Washington and Tripoli has slowed. Still, major U.S. oil companies are exploring opportunities in Libya and Libyan officials are encouraging their return.
At the Africa Oil and Gas Forum, oil industry executives and analysts agreed that the opening of Libya to U.S. companies could bring benefits to both nations, but that there are still a few hurdles to overcome.
Before the United States imposed sanctions in 1986, the largest foreign entity operating in Libya was the so-called Oasis Group that consisted of Marathon Oil and Conoco Phillips, based in Houston, and the New York-based Amerada Hess company. But new bids for energy projects in Libya could open the way to many other companies.
The head of Libya's Interests Section in Washington, Ali Aujali, says U.S. companies helped create his country's oil industry and that Libyans would welcome the return of the Americans. "We are looking forward to having the American companies back. We are doing our best to make all things easy for them. We have the new investment law and we have encouragement for them to come and to renew their job because they have a chance to compete and there is a lot of opportunity there," he said.
Tony Reinsch of PFC Energy Consultants says eventual normalization of relations between the United States and Libya could also encourage companies from other nations to come in. "The reality is that whether the sanctions applied to your company or not, there was certainly a reluctance to pursue, there was a reluctance to engage in particularly in investment levels above a certain minimum or above a certain maximum if you were also engaged in the U.S. energy market, or in the U.S. at all. That was a significant constraint," he said.
Many industry analysts see big opportunities in Libya, however, Mr. Reinsch says oil companies need to be cautious since some problems remain. The United States has yet to establish full diplomatic relations with the government of Moammar Gaddafi, who has held power in Libya since 1969 and has been accused of supporting terrorists in the past.
Some energy companies have already sent representatives to Libya to assess the current state of the industry and prepare for possible re-entry.
Stephen Faltin of the Cooper-Cameron oil services company says his people are ready and willing to work with any oil-producing companies that go back into Libya. "We know there are a lot of assets in country there and we have sent some people in and out of there trying to help these end users decide what they are going to do and how they are going to deploy the assets that have been there for 20 years. So, we are looking forward to Libya opening its doors and going in there and helping these guys produce their product," he said.
Libya could use the economic boost an increase in oil production would bring. The nation has a 25 percent unemployment rate. Libyan officials say they would welcome more foreign investment not just in energy but in tourism, banking and other industries.