U.S. oil companies are awaiting formal announcement of a decision by the Bush administration that is expected next week to lift sanctions on Libya. Companies that had been operating in the North African nation prior to the sanctions being imposed in 1986 are looking forward to exploiting the nation's rich reserves at a time when oil prices are at high levels.
Sometime next week President Bush is expected to lift some of the sanctions on Libya that have been in effect since 1986. That would allow U.S. companies with holdings in Libya to negotiate a return to Libya and the once-lucrative production they enjoyed there.
The lifting of sanctions would be especially important for the so-called Oasis Group that consists of Marathon Oil and Conoco Phillips, based in Houston, and the New York-based Amerada Hess company. Operating jointly, the companies pumped around 850,000 barrels of crude oil a day in Libya until sanctions took effect and halted their operations.
Marathon spokesman Paul Weeditz said that his company has gone on to develop production facilities in many other nations and now has over one billion barrels of proven reserves on its books. Still, he said that Marathon hopes to get back to work in Libya.
"Marathon is active in many regions of the world, but a return to Libya would be viewed as a positive opportunity for our international growth strategy," he said.
Mr. Weeditz said that Libya is a very oil rich country with proven oil deposits and the potential for more exploration. He said that Marathon cannot predict what level of production might be achieved in returning to Libya, but he says the potential is impressive.
"When we last operated in Libya back prior to 1986 and the imposition of the sanctions, we had 300 million barrels of oil equivalent of proved reserves on our books," he recalled. "Those, of course, were taken off because we did not have access to them for these many years, but that gives you some idea of the order of magnitude of our former operations and the potential opportunities that might exist in the future."
The return of U.S. oil companies would also be good for Libya, according to international petroleum analysts. Libya currently produces less than half of its 1970 high of 3.3 million barrels a day. Analysts say improved technology could boost production to near record levels.
The lifting of U.S. sanctions would be in response to Libyan leader Moammar Ghaddafi's agreement to dismantle weapons of mass destruction programs, announced late last year.
Libya has made lifting of the sanctions a condition for paying more than a billion dollars in compensation to families of the 270 people who died in the bombing of Pan Am flight 103 over Lockerbie, Scotland in 1988.
Tripoli took responsibility for the terrorist act last August and the United States restored diplomatic relations with Libya earlier this year.